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What you need to know about Amazon’s reported mid-November launch

Amazon could launch in a matter of weeks, according to Citi analyst Bryan Raymond.

Citing conversations with suppliers across a range of categories that have signed agreements with Amazon, Raymond said the e-commerce giant appears to be gearing up to launch in mid-November.

Some suppliers have already shipped stock to Amazon’s warehouse in Dandenong South, where a sign placed in the car park last week welcomed employees to work, and other suppliers are about to do so, according to Raymond.

He said “a whole bunch of distributors” are also holding stock for Amazon, which will enable the online retailer to fulfil orders across Australia, despite having just one fulfilment centre of its own at launch.

Suppliers have also told Raymond that Amazon is currently testing the performance of its Australian website.

“They’re undergoing trial at the moment. That’s where the mid-November launch date is coming from,” he said.

Raymond has not spoken to Amazon directly about its launch date and emphasised that this is his informed opinion, not fact.

“Whether they launch this year is still up for debate. It’s uncertain, depending on their logistics, getting partnerships right, websites working properly,” he said.

Australia Post’s new CEO Christina Holgate recently told the Australian Financial Review  the mail carrier is in advanced talks to provide the company’s express delivery service.

But while Raymond believes Amazon will launch in Australia before Christmas, he suggests it may have already missed the boat when it comes to convincing consumers to do the bulk of their holiday shopping on the platform.

“In an ideal world, it would already be open. Consumers would want to try [Amazon] before making those crucial Christmas purchases with them,” he said.

“I would speculate that some things internally took longer than they thought. They were pretty firm with all the suppliers we spoke to that they were launching pre-Christmas.”

A different story for Marketplace sellers

It should be noted that Raymond’s statements refer to the launch of Amazon’s first-party offering, a model that involves the e-commerce giant buying stock directly from suppliers and selling those products itself.

Amazon also operates a marketplace model that involves suppliers, brands and retailers selling their own products through storefronts on the platform. In this case, it acts as a platform and fulfilment business.

The majority of Amazon’s sales globally come from Amazon Marketplace, and it is this model that the company has promoted almost exclusively, since it announced its arrival in Australia this April.

The e-commerce company recently said over 500 sellers have registered for Amazon Marketplace, including online retailers Styletread and Costumes.com.au.

The launch date of Amazon Marketplace has also not been disclosed, but conversations with sellers suggest it is unlikely to occur within the next week or two.

In exclusive conversations with Styletread’s CEO Lee Munro and Costumes.com.au’s co-founder Nathan Huppatz, Internet Retailing learned that both businesses are still in the process of listing their inventory on Amazon.

Huppatz also said the shipping page in Amazon’s seller portal, Seller Central is not yet active.

This is crucial, since Marketplace sellers are expected to self-fulfil orders until Amazon launches its FBA service in Australia and will need to integrate with shipping carriers.

However, Miles Clemans, marketplace channel manager at inDemand, an integration company helping three Australia-based businesses list on Amazon, told Internet Retailing that there’s been a recent increase in pressure to be ready to launch.

“We don’t have any insight as to the exact [launch] date, but we’ve been asked by all our clients to rush to go live,” he said.

While he declined to name the clients, Clemans said one is an apparel supplier to Myer and Big W that is looking to sell direct-to-consumer, and the other two are multichannel retailers in the auto parts and beauty categories.

Clemans said that Amazon is now generating ASINs [Amazon Standard Identification Number] for each product listing created.

“If you’ve got an ASIN, it’s as good as ready to go. Once Amazon hits the go-live button, there are no further steps,” he said.

However, he did note that the company hasn’t provided its Marketplace sellers with a ‘sandbox’ version of the live site to check product listings.

It depends on Amazon’s pricing strategy

Meanwhile, Citi’s Raymond said the date of Amazon’s launch in Australia is largely insignificant, since local retailers won’t notice an impact for several months, if not years.

“Amazon will not be hugely impactful this year – maybe next Christmas or the one after when they start to ramp up. We’ve seen historically that Prime is the key offer that drives sales for them over time. They won’t have the full offer initially,” he said.

He conceded that Amazon could make its presence felt through the pricing strategy it takes when it enters the market.

“Amazon have three levers to pull in any market: price, range and delivery. The only thing they can really flex [when they enter Australia] is price…If they offer a very sharp price, retailers will be forced to match them. Even if the actual volume of sales is retained by the retailer, it may impact their revenue,” he said.

Australian Competition and Consumer Commission chairman Rod Sims told AFR Weekend that Amazon could set low prices without breaching competition laws, creating concern amongst retailers that the e-commerce giant will offer unbeatable ultra-low prices.

This is possible through Amazon’s first-party offer, where it can choose to sacrifice profitability, but is less likely to occur with the Marketplace model, where suppliers and brands won’t want to undercut their own prices and those of their retail partners.

Despite this, Raymond said the suppliers he’s spoken to primarily see Amazon as an opportunity.

“If you’re a brand owner dealing with two supermarkets or two department stores, you’re going to be relatively optimistic that bringing in competition will give you more avenues to sell your product. It keeps incumbent retailers in a position where they need to react, in some cases by being more supplier friendly,” he said.

“But we’ve seen offshore that it’s not all upside.”

A version of this story first appeared in issue 2145 of Inside Retail Weekly. To subscribe, click here

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