Today’s Black Friday sales will be quickly followed by Amazon Monday as the huge American retailer launches in Australia.
Research firm IBISWorld is predicting the global giant will take big losses to undercut rivals – which is good news for you, but may not be for local retailers.
“The company intends to challenge domestic retail prices by offering items for 30% less than domestic retailers. This is expected to appeal to price-conscious Australian consumers,” said IBISWorld senior industry analyst Kim Do.
“The company is expected to focus on providing consumers with low prices, a diverse product range and fast delivery.”
Woolworths has already warned suppliers they will be “cutting their own throats” if they go with Amazon and lower their prices. And it is opening four “dark” stores to handle online deliveries of its own products next year.
In some other countries, Amazon runs a subscription programme called Amazon Prime, which provides customers with unlimited 2-day shipping, streaming entertainment and e-books for $US99 annually or $US10.99 monthly.
But delivery costs in this country may rule this out.
But Australia is a perfect market for the US global giant, with high disposable income and concentrated populations along the south-east coast.
What can we expect to buy on Amazon?
Business Insider claims it has seen HP computers and printers; Dyson and Sunbeam household appliances sporting goods from Adidas, Asics and New Balance.
UBS research says it will be:
- Electrical/ Appliances: Particularly high-margin accessories which, in our view, make up a large portion of electronic retailers’ gross profits.
- Apparel/ Shoes: While customer returns are an impediment to the category, Amazon has been allocating more capital towards apparel since 2012. Specialty fashion retailers, as well as department stores are most exposed.
- Cosmetics/ Skin: A low value / high-margin category which is particularly valuable for Australian Department stores (~20% sales exposure).
The research company also predicts an enormous boom in online shopping to almost 20 per cent by 2023.