Online retailers weigh in on Amazon’s potential Q4 launch

Heather McIlvaine

12th Jul 2017

Two leaders in Australia’s e-commerce sector have poured cold water on a recent report that Australian suppliers have been negotiating terms with Amazon for the past month.

The article published yesterday on Channel News quoted unnamed consumer electronics suppliers that claim to have held meetings with the American e-commerce giant.

Responding to the story, Paul Greenberg, founder of the National Online Retailers Association, told Internet Retailing, “To me, frankly, if people don’t want to go on the record, you can’t give any real weight to it.”

The article suggests that Amazon will launch in Australia in Q4 in the consumer electronics, household goods and toys categories, and that suppliers are anticipating up to 20 per cent of revenues to come from the online retailer within 12 months.

According to Greenberg, however, some of the assertions made in the article simply don’t make sense.

A quote from an unnamed supplier seems to imply that Amazon – although this is not entirely clear due to pronoun usage – plans to set prices up to 2o-30 per cent below mass retailers.

But Amazon has stated officially that it will launch in Australia with its Marketplace offering, which allows brands to sell directly to consumers. Brands set their own prices on Marketplace, not Amazon.

“There’s no commercial logic behind the hypothesis. If I were a brand owner, I would be signing up to sell to through the Marketplace, as opposed to selling to Amazon to then sell to consumers,” Greenberg said.

Peter Macauley, CEO of Kitchen Warehouse, told Internet Retailing that while brand suppliers and vendors have shown excitement about the arrival of Amazon, he doesn’t know any that have spoken to the online retailer yet.

“The vendors that we’ve spoken to are telling us that no one has spoken to Amazon yet. Whether that’s to be believed or not, I’m unsure,” he said.

Both Macauley and Greenberg agreed that brands and suppliers are increasingly looking to sell directly to consumers, whether through Amazon or their own websites.

“I would be wary, though, as a supplier. The pie is only a certain size in terms of retail demand for a brand or product. If that demand is shifting from existing retailers to Amazon, existing retailers will plug the hole with their own private label offering,” Macauley cautioned.

“And I would say Amazon is using these brands as a beachhead to build their own private label offering. Brands my find themselves in a position there they’ve moved away from retailers, and their position at Amazon is in jeopardy. They may be left in the cold.”