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Where will Amazon’s Aussie arrival leave local online tech retailers?

Where will Amazon’s Aussie arrival leave local online tech retailers?

Analysts expect JB Hi-Fi, Myer and Harvey Norman among the hardest hit in Amazon's Australia move

Amazon's Jeff Bezos

Amazon's Jeff Bezos

Amazon’s long-awaited arrival in Australia is on its way, with the company confirming a move into the local market, but what does the company’s arrival mean for the country’s leading online tech retailers?

Media outlet, Business Insider, published Amazon’s confirmation in full on 20 April:

Amazon Web Services launched an Australian region in 2012, we launched a Kindle Store on Amazon.com.au in 2013, and we now have almost 1,000 employees in the country. The next step is to bring a retail offering to Australia, and we are making those plans now.

We are excited to bring thousands of new jobs to Australia, millions of dollars in additional investment, and to empower small Australian businesses through Amazon Marketplace. We are optimistic that by focusing on the things we believe customers value most – low prices, vast selection, and fast delivery – over time we’ll earn the business of Australian customers.

The US-headquartered online retail platform provider is already in the process of tracking down local warehouse digs with floor space of up to 93,000 square metres, according to Business Insider.

Amazon topped Deloitte’s e-retailer of the year rankings for the fourth year in a row by a large margin, joining the list of top 10 retailers of any type globally for the first time and raking in an estimated US$79.3 billion in online sales in the process.

Given Amazon’s dominance in the global online retail world, it comes as no surprise that the company might want to make a huge splash by securing a big footprint. After all, the company, founded by serial entrepreneur, Jeff Bezos, has the resources to make for a strong entry into the local market.

Clearly, Amazon’s move is likely to have a big impact on Australia’s existing online retailers, with tech retailers set to bear a substantial amount of the market disruption Amazon is expected to inflict locally.

Of the online technology retailers operating in Australia today, JB Hi-Fi is reportedly set to be one of the most affected by the introduction of Amazon into the local market, according to research by Credit Suisse, with fellow retailers Myer and Harvey Norman expected to be hit as well.

Meanwhile, brokers have estimated that JB Hi-Fi would be the worst hit in the event that Amazon opens up its virtual doors in the local market, with the company’s shares set to fall by as much as 23 per cent, according to Fairfax Media.

So far, however, JB Hi-Fi chief, Richard Murray, has remained confident of the company’s position in the local market in the face of a potential Amazon arrival.

“If we continue to keep on the money on price and we have the lowest cost of doing business — that is really powerful,” Murray said, during an American Chamber of Commerce lunch late last year, according to International Business Times. “Across a basket of goods we want to be the best value in the market. Today we know we are and we plan to stay that way.”

Likewise, founder of online retailer, Kogan, Ruslan Kogan, has previously dismissed concerns that Amazon’s arrival might harm his business, which snapped up the online business of failed electronics retailer, Dick Smith, last year.

"Amazon will hurt some retailers no doubt but the ones they'll hurt are the ones that are selling the same thing as everybody else at fat margins," Kogan reportedly told AAP last year.


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Tags myeramazonHarvey NormankoganAWSonline retailersjb hi-fi

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