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Amazon Damp Squib (So Far)
BY ALAN KOHLER - 08/12/2017 | VIEW MORE ARTICLES BY ALAN KOHLER

Well obviously fears that Amazon would smash local retailers this Christmas have been unfounded, with a pretty low-key launch by the big US outfit this week. But any complacency is likely to be equally misplaced.

A number of analysts have done some shopping on Amazon and report that prices are not particularly cheap: household goods such as laundry detergent appear to be less expensive that the major supermarkets while appliances on Amazon are dearer, especially those being sold through non-Amazon branded “Marketplace”.

It looks like, at least at this stage, Amazon is focusing on convenience and to that end is offering three options:

  1. “Priority” one-day delivery in most capital cities for $9.99 and two-days in other places for $19.99
  2. “Expedited” 2-7 day delivery for between $5.99 and $9.99, depending on where it is, and
  3. “Free shipping”, which takes 3-10 days.

None of this is game-changing, especially with Harvey Norman and JB Hi-Fi already working hard to do same-day deliveries in the cities.

On the other hand, Amazon said that its Australian first-day sales were a record for any opening day anywhere in the world, so obviously a slow start is standard practice.

Three things: retailers are still heading for a good Christmas in 2017, online sales will continue to gradually increase, putting pressure on bricks and mortar retailers and landlords, and Amazon knows what it’s doing.

As Jason Mahoney of consultancy Kantar Retail pointed out in yesterday’s Talking Finance podcast, Aldi launched in 2001 with one store and everyone poo-poohed them.

They then proceeded to register the fastest $5 billion in sales in Australian retail history and basically change the whole landscape. Jason reckons it will take Amazon half that time.

To see more of Alan Kohler visit The Constant Investor for his Weekly Overview, exclusive stock tips, investment ideas, podcasts and much more. Click here to learn more.



View More Articles By Alan Kolher

The Constant Investor is the new home of Alan Kohler, founder of Eureka Report and the ABC's finance presenter. Join to receive - Kohler's Weekly Overview, exclusive stock tips, investment ideas, podcasts and much more. Click here to learn more.



 

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