Amazon could spark a retail revolution when, as speculated, it launches its highly anticipated Marketplace platform today, disrupting consumer electronics, fashion and apparel and encouraging an acceleration of online shopping in Australia.
But it won’t all be bad news for local retailers, who until now have ruled the roost of the nation’s $300 billion retail sector.
The rolling out of Amazon’s suite of retail services would encourage more consumers to shop online and change Australian shopping habits forever. But while categories such as consumer electronics and appliances, apparel and shoes, cosmetics, bed and personal care are regarded as most at risk from Amazon’s arrival, other segments, such as baby products, auto parts and fresh groceries, may have deep moats to defend themselves.
The sector was aflutter yesterday as speculation spread that Amazon would mount a “soft launch’’ of its retail site at 2pm today, followed by a full launch tomorrow, despite refurbishment work still being done at its fulfilment centre in Dandenong South, Melbourne.
The timing coincides with Black Friday sales in the US, as Amazon tests its systems in the lead-up to unveiling a strong offer for Christmas so it can capture some of the $50 billion spent on presents by Australian consumers.
UBS analyst Ben Gilbert, in a report on the much-anticipated Amazon launch, says the retail environment is in for rapid changes once Amazon kicks off its marketplace offer, which is likely to be followed by a suite of other retail services.
Amazon, through its cheap prices, vast array of goods, transparency and rapid delivery times, will change Australian shopping habits for good, UBS says.
“Amazon’s three most recent entries suggest the rate of online penetration growth roughly doubles post arrival,’’ Mr Gilbert said in his report to clients.
“According to shoppers, the common outcome from Amazon’s full entry is a more educated and empowered customer via increased price transparency and service expectations.
“On the whole, we expect Amazon’s entry will likely be successful, with interest for its Australian launch high.’’
There should be an uplift in online sales across the retail sector. Online now represents about 8 per cent of total retail sales, growing at a rate of 70 basis points over the past 12 months.
A UBS survey found that roughly 42 per cent of respondents expect to spend more online after Amazon’s full launch, versus only 19 per cent saying online spending is unlikely to increase.
“Online growth is perceived as a major threat to incumbents. However, it is worth noting that international is losing share as local retailers invest in the platforms and improve the online experience,’’ Mr Gilbert said.
“By website type, consumers are shopping across a broad range of sites, with local retailers generally the most frequented, followed by eBay. Interestingly, Amazon is already a heavily frequented site, indicative of the fact Amazon already has a large business selling into Australia.”
The UBS report said electrical and appliances were the products Australian consumers were most interested in from Amazon, with 38 per cent of those surveyed showing interest, followed by apparel and shoes (30 per cent), cosmetics (27 per cent), bed and bath (24 per cent), personal care (22 per cent) and toys (20 per cent).
The categories with the lowest level of interest, according to UBS, are baby products, auto parts and fresh groceries, which are protected mostly due to their reliance on in-store service and the ability to “touch and feel” the goods.