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AMAZON IS COMING TO OZ – WHAT DOES THAT MEAN?

Amazon has staked it’s claim on Australian shores – How will this inevitable shift change the landscape of retail and ecommerce in Australia? We get out our crystal balls and prognosticate for the doomsayers and welcomers alike.

Many consumers are welcoming the news, economists are saying it could be a great thing for our economy to have third biggest in employer in the US employing Australians and selling Australian products to Australians from Australia for the first time. And of course there are many people worrying about an unstoppable corporate force coming in and ruining their livelihoods whether it’s a physical shopfront or ecommerce store.

Tim McKinnon, eBay CMO, is one of the doomsayers but not for Australia, it’s stores or for Amazon, itself. “It’s going to be difficult for them to match expectations” says Tim in an article from The Australian. The fact of the matter is that if it was easy Amazon would have done it years ago. Although eBay has the history a viewership of 11 million Australians a month and many strategic partnerships with vendors (small and major alike DidYouKnow that Bing Lee and Myer have eBay stores – it’s not just online auctions, imported gizmos and your sisters used clothes).


DidYouKnow that Bing Lee and Myer have eBay stores?

Another issue that will Amazon will be aware of and may just keep regional Australia at bay for a long time and might even afford opportunities for other Australian companies is the economy of scale, that we so often butt up against, required to deliver to a small population across vast space. They are used to a much denser population spread in the territories they are open for business in. It certainly won’t match the US where they have larger population centers right across the country. We have the same size and roughly a tenth of the population.

But all that, doesn’t mean that eBay isn’t shaking in it’s boots. There will be many nervous executives watching how Amazon touches down and the uptake of consumers to their offering.

People look to Netflix as proof that Amazon will kill retail in it’s bricks and mortar form, well, the writing was on the wall for Video Ezy was evident along time before Netflix landed. Other big chains to come to Australia like Costco have carved a nieche but hardly dominated the landscape of consumerism and some have even left with Chihuahua tail between their legs, I’m looking at you Taco Bell.

I’ll be honest, I think that it won’t happen like the groundswell that was Netflix in Australia but Amazon is a force to be reckoned with, with the worlds richest man at the helm, they will focus their energy and dollars in the targeted manner that has them as one of the most recognised brands in the world. Amazon will be here to stay and take a chunk out of the retail sector (a $12 billion dollar chunk from Morgan Stanley modelling) from nonconsumables to fresh fruit (eventually).

 

Which leaves us with the question, can small and big retailers online and bricks & mortar stores survive the bloodblath that is predicted by Amazon, and if so how?

Read about it in the follow up – Amazon, can I stop the eforrestation? (do you like the title? I came up with that myself)

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Written By: Rob