What Amazon’s Arrival Means for You

Amazon, the largest Internet retailer in the world, is reportedly heading for Australia.

Although the Seattle-based company has not confirmed it yet, industry experts say that they have enough evidence to conclude that the online commercial giant is setting up warehousing and distribution in Australia.

For Aussies, this development would mean access to a wide range of products. However, Amazon’s impending arrival is not without repercussions as it may impact some of your favourite retailers.

Doesn’t Amazon just sell books?

No more. Amazon in the United States (US) sells practically sells everything under the sun. Aside from its own products, it has Amazon Marketplace, which allows third-party retailers to peddle their products. In the US, there’s little you can’t get from there.

What is Amazon Prime?

It is a subscription service that costs $US99 a year in the US. Upon joining, you get video streaming and quick deliveries. Just how fast? In some American cities, customers get their order within the hour.

Amazon Prime is where the company makes a killing, because having paid the annual fee, people often feel compelled to use it — and of course, spend.

And what about Amazon Prime Video?

Prime Video is a service that competes with Netflix and boasts of Amazon’s own produced television series. In December, it was launched in several new countries, which included Australia.

How are Amazon products so low-priced?

Amazon does not try to maximise their profits or their bottom line. Using built-in price comparison software, they reinvest their cash flow into keeping prices low, and developing their distribution networks.

The end game is to lock you in as long-term consumers.

How do they target their consumer base?

Like all the other online giants, Amazon is a fan of collecting customer data.

In effect, they know a lot about you and especially your spending habits. If they don’t, they expend a lot of resources to do so.

Unlike those other companies, Amazon can offer you want you want to buy, and then deliver it to you.

Which sectors does Amazon’s arrival place at risk?

JB Hi-Fi and Harvey Norman could be in for a struggle over cheap electronics.

The fashion sector, already under siege by the effect of “fast fashion” stores such as the Zara chain, could be greatly upset by Amazon’s arrival.

Many are still awaiting word if Amazon in Australia will dip their hands into groceries, thereby affecting the current supermarket dominance.

Any major operator who uses their scale to bolster their margin, rather than modernise for customers, should be anxious.

Might Australian retailers benefit?

Most definitely. Amazon would be a new sales outlet for them, which offers them a wide array of products

Australian manufacturers on the other hand, will enjoy having a new platform to promote their products on — both to Australians, and to global consumers.