While the move is likely to positively benefit Australian customers who will now not have to bear the heavy costs of international shipping, the move however is likely to send a shiver down the collective spine of Australian retailers.
On Monday, the world’s biggest online retailer disclosed, it is very close to setting shop in Australia, the world’s 12th biggest economy.
The arrival of the U.S. e-commerce juggernaut is likely to further shake up the fragile brick-and-mortar retail sector in the country.
Although Amazon did not provide any specific data, the disclosures from Amazon’s Rocco Braeuniger suggests that it will ship goods from its first Australian warehouse for the holiday shopping season.
Analysts see the holiday shopping season as a tipping point for Australia’s staid retailers.
“Let me tell you we are getting really, really close,” said Braeuniger to around 600 prospective product merchants. Ever since Amazon confirmed its plan of opening a centre in Australia, it has signed up “many thousands” said Braeuniger.
Although Australians can buy Amazon products from offshore, a local warehouse significantly reduces the cost of international shipping. This will add pressure on brick-and-mortar retailers who are already struggling with overheads stemming from maintaining shop-fronts and employing checkout staff.
Earlier this month, Myer Holdings Ltd, Australia’s top department store chain cuts its sales target citing weak trading conditions while its rival David Jones reported its first decline in profit in eight years.
Although Amazon had earlier stated it would offer Australia its “marketplace” service, where Australian retailers can hire Amazon’s infrastructure but run their own sales, Braeuniger said the company would also run its own ordering, retail and shipping unit for its own products.
Braeuniger has suggested that Amazon would wait rather than enter Australia’s grocery market since “it’s really, really complicated to make fresh food delivery a great customer experience”.