Amazon may be coming to Australia, so what does that mean for you?
Updated
Amazon is coming, or so it's thought.
Amazon hasn't confirmed it, but various observers think they've pieced together enough evidence to indicate that this year the online retail giant will set up warehousing and distribution in Australia.
For Australians that will mean cheaper access to a range of products, but it may be at the expense of some of our favourite retailers.
Doesn't Amazon just sell books?
No longer. Amazon in the US now sells everything from fresh food to electronics.
As well as its own products, it has Amazon Marketplace, which enables third-party retailers to sell their wares.
In the US, there's little you can't get from there.
What is Amazon Prime?
A subscription service which costs $US99 a year in the US. It's a club-like concept where once you join, you get free video streaming, free deliveries, and fast deliveries: in some cities in the US, that's within the hour.
Amazon Prime is where the company makes a lot of its money, because having paid the annual fee, people feel compelled to make use of it — and spend.
And what about Amazon Prime Video?
Prime Video competes with Netflix and includes some of Amazon's own produced television series.
In December it was launched in multiple new countries, including Australia.
That gives Amazon a direct-billing relationship with a whole new batch of consumers, says the Australian Financial Review's John McDuling.
They will then be "primed" to become e-commerce consumers when that service arrives here.
How are Amazon products so cheap?
They don't try to maximise their profits or their bottom line.
Using built-in price comparison software, they reinvest all their cash flow into keeping prices low, and extending their distribution networks.
The aim is to lock you in as long-term consumers.
How do they target their consumer base?
Like Google, Facebook and Apple, Amazon is a big collector of customer data.
They know a lot about you: what you might be looking to buy, what's going on in your life.
Unlike those other companies, Amazon can offer you want you want to buy, and then deliver it to you.
Brad Stone, Bloomberg correspondent and author of The Everything Store, says Amazon has a "maniacal customer focus" that comes before being a good corporate citizen or a good employer.
Which sectors might they threaten?
JB Hi-Fi and Harvey Norman could be in for a fight over cheap electronics.
The fashion sector, already challenged by "fast fashion" such as the Zara chain, could be greatly disrupted by this new player.
Many are waiting to see if Amazon in Australia will get into groceries, affecting the existing supermarket dominance.
Any big operator who uses their scale to increase their margin, rather than innovate for customers, should be worried.
Might Australian retailers benefit?
Yes. Amazon would be a new sales outlet for them. This could help niche products especially — such as health foods, for example.
Australian manufacturers will have a new platform to get their products out — both to Australians, and to global markets.
How should consumers respond to Amazon?
Associate Professor Elizabeth Maitland, from UNSW School of Management, says consumers could wield their data power.
"I think what will be interesting is [whether] Australian customers get smart and not hand over their information for free," says Professor Maitland.
"We're very good at giving these retailers our information, which they then data mine for us.
"Maybe we'll get smarter at saying: 'If you want my data, if you want my purchasing habits, I want you to offer me more value in what you do.'"
Hear more from John McDuling, Elizabeth Maitland, Brad Stone and researcher Simon Wardley on this week's episode of The Money. Subscribe on iTunes, the ABC Radio app or your favourite podcasting app.
Topics: company-news, business-economics-and-finance, consumer-protection, consumer-electronics, information-and-communication, australia
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