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Tuesday, December 05, 2017, 12:48
Amazon seeks to conquer new continent with Australia debut
By Bloomberg
Tuesday, December 05, 2017, 12:48 By Bloomberg

The Amazon logo is projected on a screen at a press conference in New York on Sept 28, 2011. (EMMANUEL DUNAND / AFP)

Amazon.com Inc is now up and running in Australia, offering millions of products and one-day delivery in some areas as the web retailer seeks to seize a share of the nation’s growing online retail market.

The company will offer products across more than 20 categories, including consumer electronics, clothing and sports equipment, and offer free delivery on some orders, the Seattle-based firm said in a statement Tuesday.

Operating in Australia isn’t going to be easy. Although the country is almost as large as the US it’s home to just 24 million people. Major populations can be 4,000 kilometers (2,500 miles) apart, driving up the cost of deliveries. Still, with nine out of 10 Australian households already online, internet shopping will be worth A$31.4 billion (US$23.8 billion) by 2022, up from about A$20 billion now, according to researcher IBISWorld.

“The entry of Amazon will change the way Australian retailers currently operate,” said Kim Do, senior analyst at IBISWorld.

The company will offer products across more than 20 categories, and offer free delivery on some orders, Amazon stated

Amazon has been stepping up its efforts to expand in Asia. In Singapore, where it debuted earlier this year, Amazon offers its Prime Now rapid delivery service with a more limited selection of merchandise. India remains a bigger priority, with Chief Executive Officer Jeff Bezos committing US$5 billion to expand in the country, offering a wider selection of products and services.

Australia presents a new challenge for the company, with a few local web retailers already up and running. It is seeking to bring many of them into the fold by rolling out its online marketplace, open to third-party sellers.

“I think Australians are increasingly sophisticated consumers,” said Angus Smith, a 30-something Melbourne resident who checked Amazon last night for a new TV he has been looking to buy, but said he wasn’t impressed by the selection. “It had all the stuff that you can already get and shipping prices were not very different from others. It was unexciting.”

Amazon has been selling e-books in Australia since 2013, but its broader retail offering marks the company’s 13th foray into a major market. With a warehouse outside of Melbourne and corporate offices in Sydney, Melbourne, Perth, Brisbane and Canberra, the company over time will “create thousands of new jobs and invest hundreds of millions of dollars in Australia,” Rocco Braeuniger, Amazon’s country manager, said in the statement.

ALSO READ: Amazon to produce 'Lord of the Rings' television series

Its expects to introduce Amazon Prime, a subscription-based fast delivery service, in Australia in mid-2018.

“It may take some time for them to be up and running on their full logistics network,” said Citigroup analyst Bryan Raymond, who predicts that local retailers’ earnings won’t start declining until around 2020.

The prospect of a shift toward online shopping has led analysts to cut profit forecasts for local electronics chains such as Harvey Norman Holdings Ltd. and JB Hi-Fi Ltd.

“The key thing about Amazon is their ability to fulfill” orders, said Mark Hollands, owner of Lifestyle Import, which sells household goods and other items online. He attended a recent event in Sydney for sellers interested in offering their merchandise via Amazon’s marketplace.

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