Discounts or Disruption? What to expect from Amazon Australia.
Amazon Australia is on the brink of launching, so should we expect big discounts or a retail apocalypse? Either way, the game is about to change.
Amazon has prepared it's sellers who use its network for a soft launch today at 2 p.m. AEST with the full scale launch set for tomorrow, in time for Black Friday.
According to the head of Australia's competition regulator, ACCC chairman Rod Simms, local retailers will be ready for Amazon to launch. And if they're not, they should be.
"Having Amazon come in with a very different model will mean the incumbent retailers will have to be on their game," he said. "That competitive tension will be great for consumers."
The big thing manufacturers (and competing retailers) need to prepare for with Amazon is Minimum Advertised Pricing.
In the US, manufacturers are legally allowed to set a Minimum Advertised Price for products, and retailers -- whether they're bricks-and-mortar or online stores like Amazon -- can't advertise below this price.
In Australia, the ACCC firmly states that that practice is illegal.
As a result, Amazon could legally use its market power to run loss-leaders when it first launches, getting shoppers through its digital doors with cheap prices.
According to IBISWorld senior industry analyst Kim Do, Amazon "intends to challenge domestic retail prices by offering items for 30 percent less." Good news for customers, bad news for retailers.
One veteran of the retail industry said department stores and retailers without a unique selling point will lose out. That might come in the form of great in-store service, speedy online delivery or easy exchanges. Offering last season's range or a poor online experience won't cut it in the Amazon era.
Either way, as we enter the new year, rivalry with Amazon will be a fact of life in Australian retail.
Buying Intelligence gives you a critical analysis of your market's pricing and discount strategies to understand how your competitors are tackling this mass disruption.