Six Things We Need To Know About Amazon Shopping In Australia [Updated]

It is now certain that Amazon will be setting up operations in Australia. Yesterday, the shopping giant announced plans to open a 24,000 square metre fulfilment centre in Melbourne. By this time next year, Amazon expects to be fully operational. But there's still much we don't know. Here are six burning questions that Amazon needs to answer.

We’ve already discussed the potential market impacts of Amazon’s arrival and how retailers have failed to prepare for the rising tide of online shopping.

Amazon Is Coming To Australia In 2018 [Updated]

Amazon's Australian rollout plans have just been laid out by a former executive of the company - and we finally have a launch date. From next year, Australians will reportedly be able to use the online shopping service to purchase a huge variety of products, including groceries, clothing, electronics and even takeaway food. Here are all the services Australia will be getting. from fresh food delivery to Amazon Prime Now.

Read more

The Australian rollout is now inevitable, but the logistics of the operation remain shrouded in mystery. Will Amazon pay GST? Will access to the US store be blocked? And how will its delivery system work over here? Let's take a look at these questions, and more.

#1 Will Amazon’s prices be cheaper because they’ll bypass paying GST?

Once Amazon starts trading in Australia they’ll be collecting GST and sending it to the ATO just like any other business. The ATO is very clear about that. Assuming they turnover more than $75,000 per financial year, they’ll be on the hook for GST collection.

The government made changes in the last budget so that overseas companies doing more than $75,000 of business here should be collecting GST. The new rule was even called the Amazon Tax.

If Amazon's prices are cheaper, it won’t be because of GST, despite Gerry Harvey’s complaints to the contrary.

#2 Will access to the US store be blocked?

There are already a number of items that can’t be purchased in Australia from Amazon - mainly electronics and books, movies and music where distribution arrangements get in the way of free trade.

I suspect some of the issues will come down to individual product manufacturers and the distribution deals they have here.

For example, KitchenAid mixers are far cheaper in the US than locally. There was a time you could order them online from US retailers like Macy’s who would ship them here, undercutting the local distributor by about 50 per cent - even taking into account the need to buy a transformer as those mixers were made with scale-specific power supplies. That stopped when the local distributor cottoned on and had Macy's stop shipping the mixers and accessories to Australia.

I doubt access to the US store will be blocked but I suspect the range of products available from the US or other international Amazon stores will be limited against what will be locally distributed.

#3 Will we get slugged with an 'Australia tax'?

Amazon founder Jeff Bezos once said: “Your margin is my opportunity”. If Bezos is true to his word, he’ll be looking to undercut local prices wherever possible.

However, all importers and overseas retailers hedge their pricing against currency fluctuations. There’s no reason to think Amazon won’t do the same for goods that are sourced outside Australia.

Will this make some items more expensive here? Almost certainly. But there will be instances where local prices will be cheaper than the US if you take into account the spot price of currencies.

#4 Will Amazon crush Coles' and Woolworths' dominance?

Not for a while. While we expect AmazonFresh will be part of Amazon’s Aussie thrust, we still seem pretty committed to the local supermarket. IBISWorld says online grocery sales are growing by almost 16 per cent year on year.

Amazon will bite into those sales. If Amazon engages in an aggressive price war, I suspect we’ll see the number of people shopping for groceries online sharply rise, and supermarket sales to take the hit.

Aldi has been the most successful challenger to the Woolworths and Coles dominance. But they are playing a long game, establishing supermarkets in new suburbs, and by supplementing their house brands with some more well-known local ones.

Coles and Woolworths aren’t going anywhere soon but they are going to feel the pinch. And that’s good for consumers.

#5 Will Amazon open bricks and mortar stores?

Brittain Ladd, a former senior manager on a small group inside of a very large team working on Amazon Fresh and Pantry operations, said the company will "build physical grocery stores and launch Amazon Go only after Amazon has become more established in the country and analysis determines the market will support physical stores.”

In other words, maybe yes, but not for a while.

What about delivery logistics?

I hope they establish their own delivery service. I have nothing but trouble with Australian courier services who can’t tell me when they’re likely to arrive.

My partner shops with one of the Big Two local supermarkets and gets her groceries delivered each week. She chooses the delivery day and a four hour delivery window that suits her. That day, she gets a notification with a more precise 30 minute delivery window.

That’s a decent level of service that Amazon will need to equal or surpass.

To do that for groceries, they’ll need their own distribution centres, trucks and drivers. The process for setting up that infrastructure has commenced with Amazon leasing a warehouse in Melbourne's south - a facility previously used by Bunnings. This flies in the face of Gerry Harvey's prediction that it will take Amazon years to set up the infrastructure it needs.

With non-perishable items, I suspect they’ll use traditional delivery services but, as they build their own local fleet, they will use that more and more to ensure they get the most value from it.

Amazon Is About To Kick Traditional Retail’s Butt

We are at the dawn of a new era - and like the dinosaurs who just thought they were having an off day - many Aussie retailers aren’t going to know what’s hit them. In the coming months Amazon will start opening its online doors in Australia. And already locals are seeing an impact.

Read more


What are your thoughts on Amazon in Australia? Share your opinions and questions in the comments section below!

Note: Amazon has contacted us and said that Brittain was not "an ex-senior manager at Amazon who was instrumental in global expansion planning". The article has been amended to state he was "a senior manager on a small group inside of a very large team working on Amazon Fresh and Pantry operations".

WATCH MORE: Tech News & Life Hacks

Comments

    Just the fact that there will be far cheaper delivery costs will win me over. The only reason I don't buy a lot of gear from the US is that the parcel post to here can cost nearly as much as the item you purchased and that includes parcel dispatchers that give you a US address.

    We can enjoy the short term delusion of a consumer paradise.
    But if the world were made of oil, it would still run out.
    This party, it's finite.
    Amazon is a marker of the excess endgame, not the sunlit uplands of an online, mobile wundar-future.

      Where do "anti-consumerists" get their computers, phones, routers etc., they need in order to access the Internet. Guess they have to BUY them unless they use a local library. I guess they grow their own food and walk barefoot and nude everywhere.

      What's the name of the organization you seem to be a card carrying member of?

    Any word on Amazon Prime benefits being provided in AU? Eg, video, ebooks, music, audible, etc

    I for one will be using the new Amazon when it is established in Australia, mainly because as a rural resident I receive appalling service from freight companies, with the exception of Australia Post. Any serious competition in this space with an emphasis on service and delivery would be most welcome.

      Not just the freight companies. Look at the delivery charges of Officeworks for rural customers. I was looking at buying a small item that cost about $8 and they wanted $25 delivery charge. Bought the exact same item from a well known online store instead and delivery charge was about $7.

      Australia Post used to be good but it now take 6 to 10 days for delivery from a capital city to me town. A friend living in Sydney has bought same item from the UK at less cost and they arrived in 9 days and delivery charge was less as well.

    Who cares? Amazon is just one more consumerist-push, retail giant selling all manner of useless crap that no one really needs.

    You say retail giants are all dinosaurs? Well, so is Amazon and anyone of their ilk - the world is slowly sinking beneath a tide of plastic crap and electronic waste from discarded gadgets, while we run out of oil, energy, clean air and water, and the planet becomes overpopulated.

    Amazon is just one more nail in the coffin of our ridiculous consumer culture.

      Bad day?

      I see we have yet another card carrying anti-consumerist who never buys anything and frowns on anyone who would even dream of buying any product that's not absolutely essential for survival.

      Tell me, you do live in the wilderness somewhere and have made your home out of mud and fallen branches. You gather berries and dig for yams. If you have to travel to a city you walk, barefoot of course. If you needed to see a doctor it would be a local shaman.

      In the real world people earn a living and pay taxes that go towards providing hospitals and schools and other benefits of the modern world lifestyle.

      I understand your point of view re the excesses of consumerism, but for the majority of people struggling to put a roof over their heads and feed their family, excess is not the case.

      Last edited 04/08/17 1:29 pm

    Let's hope they're smarter than most seppos. Last time I spoke to a US head office, they think everyone has $3 an hour Mexicans in their warehouse and cheap leases... With property prices in Australia, they will have the same problems that everyone else has... cheaper... yes... but how much...

      Since they are all through Europe I think they have worked that out already.

    I doubt access to the US store will be blocked but I suspect the range of products available from the US or other international Amazon stores will be limited against what will be locally distributed.

    I freaking hope not. The reason I import my BluRays is because the price is still hyper inflated here.

    Take Adventure Time. Season 5 was released as two volumes and each one priced more than the in the US where the whole season is in the one box.

    My mother likes NCIS and every Christmas as a little tradition I get her the boxset. It wasn't long before I stopped getting the local version and instead the US version. Not only was the unit cheaper but up to season 7, most (if not all) the special features were removed in the AU version yet the price was almost double.

    So if Amazon sets up shop here, it would be suicide to try and limit which story the Australian public can visit.

    Furthermore, of they limit access to the US store, are they also going to do the same with the UK store?

    It cannot be just limit one store for the sake of another while other arms remain unchanged.

      If they did stop Australian's from buying from the US/UK, but permitted say Kiwi's to buy from there, I could see many people having a Kiwi friend do just that for them, as long as the extra postal charges weren't too much.

      Another way around the problem would be to use a VPN with a server in the US and buy the product/s you require and give the address of one of those service that ships them to Australia. Would probably still come out much cheaper then just buying the items in Australia.

      I for one am glad to see Amazon moving into Australia. I hope Walmart does the same. Globalization has benefited the Aussie mining industry but not so much the general population, at least compared to America. Why are Australians still paying more than Kiwi's for some products we make here and export to N.Z? The duopoly of Woolworth's and Coles is the reason. Lack of true competition means we pay prices substantially higher than many other places. "Whatever the market will bear". That's the catch-cry of CEO's in Australia. And when the government hauled those CEO's in to explain why we pay double or more, they made excuses and failed the pub test.

      Sorry for the rant. Will go back to my hole. ( Goanna )

        Why are Australians still paying more than Kiwi's for some products we make here and export to N.Z?

        Because it can be done. Unless legal barriers are imposed thus killing off free enterprise and open markets, it will continue to happen.

        If a business does not listen to the sound of wallets walking away, then its the fault of said business when it finally falls.

        In short, if they can gouge they will.

          Gouging is exactly what the bricks and mortar stores do. I needed a computer accessory for my work and the price from an Aussie retailer was $90. Same item on Amazon around $15 after currency convert. Postage? I didn't bother checking because it said item not shipped to Australia. Found it on Ebay for about $20.

    With the implementation of "Amazon Tax", are there any early reports to show how much this will affect revenue for SME's?

Join the discussion!

Trending Stories Right Now