Retail relief at soft Amazon Aussie debut

amazon11Australia’s retailers have had a reprieve – however brief – with Amazon’s local online operation underwhelming analysts with a debut offering featuring a narrower than expected product range and smaller than expected discounts.

Amazon.com.au went live in the early hours of Tuesday with more than 20 categories ranging from toys, sports, tools, beauty and clothing.

However retail analysts said the discounts on offer are not as aggressive as expected, the range was slim and delivery times are no better than local retailers’ service.

“The range is patchy across and within categories; for example, over 40,000 toys and games are available from a large range of brands, while televisions are not yet available,” Citi analysts said in a note.

The initial impact was a boost for retail stocks on the ASX as investors decided any pre-Christmas impact from the arrival of the global internet behemoth would not be as bad as feared.

Citi’s team said with its current offering “Amazon will not be disruptive to Australian retailers this Christmas”.

The majority of goods on Amazon’s Australian site are offered by third-party players such as Kogan.com and Catch Group.

Customers have been offered free delivery on orders above $49 that are sold by Amazon, with a paid one-day delivery service available in some areas.

Morgan Stanley analysts said Amazon’s offer will improve in coming years but it was unlikely to have a big impact on local retailers in the short term.

“Longer term, we see department stores as the losers from Amazon,” Morgan Stanley’s team said in a research report.

They said the range lacked market-leading brands, with the sports category only having New Balance and Adidas, while Super RetailGroup’s Rebel Sport stocks Nike, Asics, Adidas, Under Armour, New Balance and more.

The analysts compared 29 items on the Amazon Australia store with prices at JB Hi-Fi, Rebel Sport, Myer, Coles and Woolworths and found consumer electronics was about 13 per cent more expensive on Amazon.

They also found apparel and sports is largely in line with leading retailers and dry grocery is 13 per cent cheaper on Amazon versus Coles and Woolworths.

Many ASX-listed retailers that were sold off ahead of Amazon’s launch, including JB Hi-Fi, Harvey Norman, Myer and Super Retail Group, gained on Tuesday, although upbeat retail sales data also helped sentiment in the sector.

Amazon’s subscription service, Prime, which gives members shipping, shopping and entertainment benefits, won’t launch in Australia until mid-2018. 

Amazon’s country manager, Rocco Braeuniger, said in a statement that the retailer was concentrating on providing a “great shopping experience”.

“By constantly innovating on behalf of customers, we hope to earn the trust and the custom of Australian shoppers,” he said.

Harvey Norman chairman Gerry Harvey said he was not worried by Amazon and warned consumers to be wary of its promises to deliver before Christmas.

“If you order something off Amazon, heads you get it, tails you don’t,” he told Seven.

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