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Amazon is to make its hotly anticipated debut in Australia on Thursday, setting up the day before the Black Friday shopping frenzy.
The US ecommerce group, which already offers its Kindle ebook and cloud services in Australia, in May unveiled plans to set up shop Down Under, immediately sparking a slide in domestic retailers’ share prices. Morgan Stanley calculated the sector’s earnings would be dented by almost A$600m by 2026.
Amazon, which earlier this year marked its own move into bricks and mortar retail by splashing out $13.7bn for upscale US grocer Whole Foods, is operating a third-party platform in Australia. Reselllers planning to use the platform were told by email that “an internal testing phase with a small number of customers” would kick off at 2pm local time on Thursday.
“Let’s make History!” concluded the email, signed the Amazon Marketplace Team.
Black Friday, on the day after Thanksgiving in the US, kicks off the global retail calendar’s busiest shopping period, marked by a slew of promotions and discounts. Analysts expect the day in the US to top last year’s $5.9bn haul over Black Friday, Cyber Monday and Thanksgiving combined.
Amazon, which declined to confirm the start date, made an early bid to focus attention on the benefits rather than the disruption caused by its entry, promising to create hundreds of new jobs in Australia with the opening of its 24,000 sq m fulfilment centre.
But disruption is on the cards for Australian shopkeepers, as it has been for their peers across the globe. Morgan Stanley estimates Amazon’s sales in the country could top A$12bn by 2026 and, says Gary Mortimer, associate professor at University of Queensland, general merchandise such as toys, clothes and consumer electronics, is set to feel the impact first.
“These types of products are relatively homogeneous,” he said. ”If you know the model of digital camera, brand of kettle or type of toy, it will be pretty easy to jump on line and grab one. . . Food and groceries are problematic, as perceptions of quality are very subjective and lead time impact on perishability.”
Research firm IBISWorld forecast a shakeup of an Australian retail market where online sales now account for just 7.4 per cent of total spending. That is less than half of the level in China, but is projected to reach 15 per cent by 2022-23.
Amazon “intends to challenge domestic retail prices by offering items for 30 per cent less than domestic retailers,” said Kim Do, senior industry analyst at IBISWorld.
“This is expected to appeal to price-conscious Australian consumers and is likely to affect local retailers that have found it difficult to adjust to a shift in consumer spending behaviour over the past five years.”
Rob Scott, managing director of Wesfarmers, which analysts expect to be worst hit, downplayed the impact, telling Australian media that this Christmas would be the supermarket-to-DIYretailer’s biggest yet. Wesfarmers owns Target, Bunnings and Coles, the supermarket group.
Australian retailers have had a bruising year with weak consumer confidence and poor sales pushing a dozen clothing retailers, including Top Shop, into administration. It follows an influx of foreign retailers such as Inditex-owned Zara and Hennes & Mauritz over recent years.