Open for business: Amazon lands in Australia
The online retail giant yesterday opened its virtual doors to customers, with millions of products in more than 20 categories available for purchase, from clothing, shoes, beauty and homewares to electronics, tools, toys and sports.
The retail offering includes big name brands, such as Puma, Lego, L’Oreal and Sonos, and local favourites, like Bonds and Sol-Sana, while the Marketplace features a wide range of products from thousands of Australian businesses, including Mitch Dowd, Bendon Lingerie, Matt Blatt, Styletread and Costumes.com.au.
Depending on their location, customers can choose from a range of delivery options for products that are sold by Amazon and fulfilled from its 24,000 sqm warehouse in Dandenong South.
According to Amazon, this represents one of its biggest initial launches to date, with even more products, services and delivery options to come in the months and years ahead.
“Focusing on customers and the long-term are key principles in Amazon’s approach to retailing,” Amazon Australia’s country manager, Rocco Braeuniger, said yesterday in a statement.
“By concentrating on providing a great shopping experience and by constantly innovating on behalf of customers, we hope to earn the trust and the custom of Australian shoppers in the years to come.”
Yesterday’s launch appears to have confirmed analysts’ expectations that electronics, fashion, sporting goods and toys will be hardest hit, with retailers like JB Hi-Fi and Harvey Norman bearing the brunt of the ecommerce giant’s arrival.
Barbie, Batman and Hot Wheels products are available on Amazon for up to 30 per cent off the recommended retail price, while Sunbeam kitchen appliances are up to 20 per cent cheaper.
According to a recent UBS report, the ecommerce giant could steal two per cent of retail sales within five years of entering Australia, growing revenues from more than $400 million to about $3.5 billion by 2023.
No FBA, no Prime
The launch yesterday also provided clarity on several key questions that Amazon has been ducking, since it first started recruiting brands and businesses to its Marketplace platform seven months ago.
IRW can now confirm that Amazon Prime, the company’s hugely popular loyalty program, and Fulfilment by Amazon (FBA), a warehousing and fulfillment solution for Marketplace sellers, are not yet available in Australia.
Amazon Prime is set to launch in mid-2018, while FBA is said to be coming soon. Speaking at a recent event for potential sellers, Amazon Australia’s head of marketplace, Fabio Bertola, described FBA as a key pillar of the offering.
“We know that Australian businesses will be keen for us to have FBA,” he said at the Marketplace Seller Summit in Sydney on November 13.
Sellers that use FBA in other markets say it’s valuable for several reasons, including lower freight rates, thanks to Amazon’s economies of scale, and intelligent distribution.
FBA allows sellers to send their products to one warehouse and have Amazon distribute the right amount of products to other warehouses based on predictive analytics.
This ensures faster delivery nationwide, with the flow-on effect that sellers are more likely to be eligible for Amazon Prime and ‘win the buy box’, an add-to-cart shortcut associated with higher sales.
When FBA does launch in Australia, Bertola said products will be stored at Amazon’s warehouse outside Melbourne and shipped anywhere in the country for a flat rate.
Amazon has not said when or where it plans to open other warehouses in Australia, but Braeuniger confirmed the company plans to invest hundreds of millions of dollars in the country and create thousands of new jobs.
“The result will be an ever-improving customer experience driven by the regular introduction of new products and services that we hope customers will love,” he said.
Braeuniger has shed light on Amazon’s strategy in the past. Speaking at the Marketplace Seller Summit event in November, he said the company is guided by four key principles: to be customer-focused, long-term thinking, passionate about innovation and committed to operational excellence.
“We want to be Earth’s most customer centric company,” Braeuniger said at the event.
At the same time, Amazon has both the resources to spend years developing projects and ability to absorb the costs if they don’t pan out. This approach has resulted in some of the company’s most competitive offerings, from Marketplace to Amazon Fresh. It’s also what makes the company so hard to compete with.
“We do not sacrifice long-term success for short-term results,” Braueniger said.