Amazon made its way to Australia this month, launching its AU operations quietly in Melbourne. It’s yet another move in the organization’s initiative to globalize and gain a foothold in the international marketplace.
But so far, Amazon.com.au – or Amazon Australia – has received a lukewarm response, both from customers and local retailers alike.
The lack of enthusiasm could be due to the minimal sellers the site currently has (and its less-than-competitive pricing as a result), or it could be that retail just isn’t as big a hit in Australia as it is here in the U.S.
Let’s look at Amazon Australia in more detail to find out more.
Amazon Australia: The Details
Historically, Australian vendors could always sell their products via Amazon, but until this week, they had to send the orders offshore for shipping and packaging, as no AU warehouses existed to serve them.
This made the site’s ever-attractive “Fulfillment by Amazon” offering – which often makes the entry into ecommerce selling easy and more affordable for new sellers – just an extra hassle, instead of the nice boon to business it’s designed to be.
On the other end of the spectrum, Australian-based buyers (for the same, lack-of-warehousing reason), had to pay more for shipping and wait longer to receive their packages.
It was a no-win situation for both parties.
Thanks to an expansive new distribution warehouse just outside of Melbourne, both AU sellers and buyers alike can be better served. Eventually, the location should even allow for one-day delivery times for much of the country’s shoppers.
“This is just the start,” Amazon’s director of operations for Australia, Robert Bruce, said in a statement for ABC News.
“Over time, we will bring thousands of new jobs to Australia and millions of dollars of investment as well as opening up the opportunity for thousands of Australian businesses to sell at home and abroad through Amazon Marketplace.”
But so far, Amazon Australia only has a few hundred third-party sellers on its site, and its product assortment is pretty low. And for the products it does have?
The pricing isn’t that competitive – at least not yet. Once that assortment start to jump, competition should drive down pricing and make Amazon’s offerings more competitive.
Amazon Australia also isn’t yet offering its Prime program, which accounts for about 63 percent of all Amazon members in America. (Prime members also spend about twice as much annually on the site as non-Prime members, so there’s more potential on the horizon for you.)
And though AU shoppers can’t yet take advantage of that free Prime shipping, the site is waiving shipping fees for purchase over $49 – something few traditional AU retailers ever offer.
It’s important to be clear, though: Amazon Australia is still in its very early stages – and the Amazon as we know it wasn’t built in a day.
There’s still plenty of upward mobility for the brand on Australian soil, especially as more sellers join its ranks and its product offerings and pricing get more and more competitive.
Amazon Australia: The Response
Overall, the response to Amazon Australia has been less than enthusiastic, both from the retailer and the customer side of the experience.
Shoppers have complained on social media about poor product selection and pricing options, and retailers are unimpressed with the American megalith hitting Australian ground.
In fact, the president of Harvey Norman, a major, longtime AU retailer, seemed unfazed. He told the New York Times “We’re not going to adjust to anything … They follow us, we don’t follow them.” He also called Amazon’s arrival a “non-event” and “lame.”
Another industry expert told CNBC, “The retailers are rallying. It’s a realization that Amazon is not going to kill Australian retail, at least not today.”
So far, local retailers are still seeing growth, despite the incoming of such an online giant.
Harvey Norman recently expanded its physical footprint, while shares of AU electronics retailer JB HiFi stock have jumped 5 percent since Amazon announced its Australia plans earlier this year.
Shares of Australian department store chain Myer Holdings also rose for the quarter, rising 2 percent.
To be fair, the retail market in Australia pales in comparison to that of the U.S. The American retail market totals about $300 billion, while AU’s is just $20 billion – a mere fraction of that value.
And of that $20 billion? Less than 10 percent comes from online sales.
Still, the story is just beginning for Amazon Australia.
And as soon as the kinks are worked out, its list of sellers expands and its pricing become a little more competitive, it could leave the Australia retail market stronger and more lucrative than ever before.
“While Amazon’s arrival in Australia has been received with something short of excitement, it’s not uncommon for them to go to market with a minimum viable product and rapidly expand from there,” Pat Petriello, Head of Marketplace Strategy at CPC Strategy said.
“We’ve seen a similar approach in other markets, such as www.amazon.com.mx, as well as with product functionality going back to the early days of FBA and Sponsored Products. Amazon has to start somewhere, and it will be interesting to see how quickly they are able to gain traction in Australia.”
To learn more about Amazon Australia, email [email protected].