What will happen when Amazon Australia launches?
We’ve been hearing about it for almost a year now. Amazon’s coming to Australia and it’s going to change how people buy and sell Down Under.
No doubt, generally speaking. Amazon marketplaces can take anywhere between 1% and 25% of online sales for a specific market. Furthermore, in the US it accounts for about half of online retail sales growth.
Now that it looks as if Amazon Australia will launch in early 2018, the questions become what specifically will happen here? How will it impact retailers, brands and the general economy in Australia? And what, if anything, will happen to New Zealand businesses?
Amazon Australia May Lower Inflation
Amazon may lower inflation in Australia. According to UBS economists, Amazon’s downward price pressure on retail could reduce inflation by 0.25%. Economists point out that while retail prices in Australia grow by 1.5% annually on average, in the US the rate is about .5%.
Big Retailers May Use Amazon
Whatever happens, UBS predicts change will be quick, but not overnight. Consequently, retailers will have time to adapt. Between 2018 and 2023, Amazon Australia sales could increase from $400 million to $3.5 billion a year. Big retailers will protect their margins by offering unique products and service, or they’ll start incorporating Amazon as one more sales channel.
A Cheaper, Faster Amazon for New Zealand
Amazon reportedly lined up two distribution centers in Australia. While it’s still unclear where New Zealand fits with Amazon’s long term plans, a shorter supply chain will surely drive down delivery prices. Retail consultant Chris Wilkinson says Amazon’s move into Australia puts New Zealand in its distribution sphere, resulting in lower delivery charges and shorter waiting times.
An Event To Get the Conversation Started
Observers expect it will take Amazon Australia time to get up to speed. That makes now the right time for New Zealand retailers to start talking about how Amazon Australia will impact their business.
This is especially true for fashion and apparel retailers. Many are already asking what an Amazon Australia marketplace will mean to their business.
Join Cin7 for a breakfast event in Auckland on August 29 featuring thought-leaders, including Chris Wilkinson, Managing Director of First Retail Group, to discuss Amazon and what Kiwi fashion and apparel retailers need to do to be Amazon-ready.