SYDNEY: Retailers in Australia have been anticipating the arrival of Amazon since April, but it now appears the US e-commerce giant is poised to launch as early as next month, giving it time to exploit the pre-Christmas sales boom.
That is according to new analysis from investment bank Citi in a note to clients, which said Amazon has already placed its first orders with suppliers, Business Insider reported.
Led by Bryan Raymond, the team of Citi analysts said Amazon is expected to offer free delivery for orders over a certain value and will look to launch Prime, its membership service that offers streamed video and other benefits, in July 2018.
“We would expect a formal launch to occur sometime in October 2017, ahead of Black Friday on 24 November,” Raymond and the Citi analysts said, before adding that Amazon is likely to push hard on price, so raising the possibility of a pre-Christmas price war.
“Amazon is likely to maintain a strategy of matching or being the lowest price in the market at all times. This could spark a response from incumbent retailers who are intent on not being beaten by Amazon on price during the key pre-Christmas sales event,” they said.
“In our view, lower pricing will likely be the result of Amazon’s lower margin and ROI expectations, particularly in the short term. A lower cost-to-serve could provide support for favourable buying terms relative to bricks and mortar retailers.”
Amazon is expected to target the gift market initially, the analysts said, and the retail sectors most likely to feel its impact are food, alcohol, furniture, hardware and auto.
The US retail giant is then expected to turn its attention to electronics, department stores, leisure, clothing and footwear.
Finally, they estimated that Amazon could generate sales of $200m in the second quarter of 2018, which would account for 0.2% of total retail sales in Australia.
That is according to new analysis from investment bank Citi in a note to clients, which said Amazon has already placed its first orders with suppliers, Business Insider reported.
Led by Bryan Raymond, the team of Citi analysts said Amazon is expected to offer free delivery for orders over a certain value and will look to launch Prime, its membership service that offers streamed video and other benefits, in July 2018.
“We would expect a formal launch to occur sometime in October 2017, ahead of Black Friday on 24 November,” Raymond and the Citi analysts said, before adding that Amazon is likely to push hard on price, so raising the possibility of a pre-Christmas price war.
“Amazon is likely to maintain a strategy of matching or being the lowest price in the market at all times. This could spark a response from incumbent retailers who are intent on not being beaten by Amazon on price during the key pre-Christmas sales event,” they said.
“In our view, lower pricing will likely be the result of Amazon’s lower margin and ROI expectations, particularly in the short term. A lower cost-to-serve could provide support for favourable buying terms relative to bricks and mortar retailers.”
Amazon is expected to target the gift market initially, the analysts said, and the retail sectors most likely to feel its impact are food, alcohol, furniture, hardware and auto.
The US retail giant is then expected to turn its attention to electronics, department stores, leisure, clothing and footwear.
Finally, they estimated that Amazon could generate sales of $200m in the second quarter of 2018, which would account for 0.2% of total retail sales in Australia.
Data sourced from Business Insider; additional content by WARC staff
