An international fund manager who claims to have been briefed on Amazon’s expansion plans into Australia says it wants to “destroy” the local retail industry upon its launch next year.
“We spoke to the guy rolling out Amazon’s business here in Australia and in his words: ‘We are going to destroy the retail environment in Australia’,” Watermark Funds Investment chief investment officer Justin Braitling said, as reported in The AFR’s Chanticleer column today.
The investment executive said that Amazon would open distribution and performance centres in every state in 2017 and will have both general and fresh items ready to go upon launch.
“They will also be putting physical stores on the ground which I don’t think anyone knows about,” he told the AFR.
“These will mainly be in regional areas because fulfilment is a lot harder in regional areas than in the cities.”
Business Insider has contacted Amazon for comment.
Amazon currently runs 11 marketplaces: USA, Canada, Mexico, UK, Germany, France, Italy, Spain, Japan, China and India. The Australian arm will reportedly use the same brands as other regions — Prime, Prime Now and Prime Fresh.
Braitling claimed the Australian go-live date has been pushed back from March to September in order to have the fresh food offerings ready.
One of Amazon founder and chief executive Jeff Bezos’ most famous quotes is: “Your margin is our opportunity”. This philosophy is set to be applied ruthlessly here, with Watermark reportedly told that Amazon would perform pre-launch price audits to undercut local prices by 30%.
The AFR says the US giant sees “enormous potential” here, believing that current prices are too high.
Traditionally fresh food has been the critical advantage the two dominant Australian supermarket brands Woolworths and Coles enjoyed over its rivals, but with Aldi ramping up its capabilities in the area and Amazon’s imminent entrance into the country, the two chains will face much angst from shareholders.
Australian online retail sales exceeded $20 billion in the past year, according to the National Australia Bank, up 14.2% from the previous year.
In the USA, Amazon holds an astounding 50% of online retail market share. Watermark predicts the giant will have 10% of the overall US retail market in a decade from now.
By Tony Yoo for www.businessinsider.com.au