According to an earlier published report by UBS, In order to forecast the impact of Amazon on Australia, one should consider the path undertaken by the retail behemoth in Canada, which has consumer market almost similar to Australia. In Canada, Amazon got off to a slow start and rolled out its full retail offer eight years after launching Marketplace – but now after 7 years it is growing sales by around 50% a year and generating revenues north of $4 billion.
Canada maybe a framework for understanding how Amazon penetrates a market but here in Australia, Amazon is coming in much more aggressive, They had the biggest launch for any market place and now after one and half year, they are rapidly expanding their offering with recent launch of Garden category. At present Amazon Australia offer more than 25 million products on its Australian Marketplace. Well, it may take 2-3 years before full material impact of Amazon presence will be felt but for entrepreneurs, the time to enter the marketplace is probably now!
Traditional markets differ from online ones in a way that on traditional markets repeated transactions are infrequent, consumers are largely forced to rely on brand reputation, warranties, and information provided by retailers to assess the quality of products. Online platforms include peer review systems and furthermore Amazon being a data driven company has everything designed to ease the check out. This greatly increase the information available to consumers, which enables them to impose market discipline on poorly performing firms. Online retail delivers greater power to consumers which also increases competition and drives down prices so at the end consumer tend to gravitate toward the efficiently run online marketplaces. And we are already seeing this impact as recent reports highlight that Amazon is responsible for increase in eCommerce penetration in Australia.
The lure of Amazon lies in its capability to offer a large scale consumer market to the sellers while at the same time empowering them with tools and infrastructure to start and run business without any large scale investment. With their Fulfillment by Amazon (FBA) offering sellers do not need to invest in building warehousing infrastructure. Just sign up with Amazon, create your product listing, send few items to Amazon FBA warehouse and you are in business! To summarize, few of the takeaway pointers in favor of selling on Amazon are:
Increased Exposure
Amazon is a trillion dollar company and as indicated earlier, presence of Amazon in Australia is already attracting accelerated eCommerce penetration. More number of online customers are purchasing on Amazon Australia and this number is expected to increase quickly thanks to aggressive marketing of the online giant. Needless to say that if you want large scale exposure to customers than it is better to sell on marketplace like Amazon Australia instead of running your own web store
Early Bird Advantage
Though Amazon Australia now boosts more than 25 million products however right at the time of writing, most of these products are imported one, selling at higher price margin. Any smart seller moving into the Amazon marketplace and identifying the in-demand products and subsequently selling them here after importing and placing them in local FBA warehouses will benefit from the increased sales and establish themselves as a well trusted brand. Time to invest in this marketplace is now!
No need to invest in Warehousing Infrastructure
To began selling on Amazon Australia, you do not need to spend a lot on building warehousing & storage infrastructure. With Fulfillment by Amazon” (FBA), you can send stock of your product to Amazon warehouse and afterwards Amazon handles all the order fulfillment while you can sit back and relax. By taking the order fulfillment off your hands, as a small seller this allows you to spend your time and energies on business development instead of packaging and shipping the parcels.
Low Cost to Entry
There is negligible cost to entry into Amazon Marketplace, though you can start selling without paying anything to Amazon however I always recommend to sign up for Professional Seller Account (costs $49.95 AUD). A 6-15% commission fee off the top of any sales generated through the Amazon Marketplace. This fee will be determined by the type of product you’re selling
Access to Marketing Tools
Amazon Australia is still in its nascent stage as compared to its USA marketplace however right now it offers platitude of marketing tools to help sellers get started. ‘Sponsored Products’ a pay per click advertising solution is now available in Australian marketplace along with options to run product deals.
Amazon has revolutionized the retail industry, Already presence of Amazon is being felt by the local Australian Business, According to a recent report, there was 2 % increase in eCommerce penetration and the increase in number of users doing online purchases is being driven by Amazon and its strong brand identity. For sellers, this is an opportunity to place themselves at front seat of this eCommerce drive by selling on Amazon Australia.
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