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BFM | FEATURE

Amazon’s arrival creates both challenges and opportunities Amazon is arriving at last. After years of rumours, the online retail giant, which turned over $US136 billion in revenue and accounted for 43 per cent of the US online retail market in 2016, is finally setting up its shop in Australia. Chad Gates, Managing Director, Pronto Software.

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he company has confirmed its local fulfilment centre is based in Dandenong, Victoria; a fact that should cause concern among Australia’s major domestic retailers, particularly department stores. According to a 2017 Morgan Stanley report – The Amazon Effect in Australia – the local emergence of Amazon is anticipated to strip $800 million in earnings from chains such as Harvey Norman, JB Hi-Fi and Myer. The report estimates Amazon will generate as much as $12 billion in Australian sales by 2026, and will gain 15 per cent of the department store market in the same time frame. Other retailers aren’t any less immune to the Amazon effect. Morgan Stanley predicts the online giant will have 5.6 per cent of the furniture and hardware sector, and 6 per cent of the domestic office

14 BUSINESSFIRST MAGAZINE

supply market in the same time period. The establishment of the Dandenong logistics centre, and the suggestion more could follow, indicates Amazon will place great priority on speedy, inexpensive deliveries to Australian consumers. The company’s logistical might is something local retailers will struggle to match, particularly if Amazon launches its Prime membership service. Consumers in the US pay $US99 per year for free, next day deliveries. On top of free delivery, Prime members also get free access to Amazon’s music and video services, all of which serve to keep customers in the Amazon ecosystem. Is it all bad news? Australian retailers have reacted to Amazon setting

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BFM NOV/DEC 2017  

With the festive season upon us, it is a good time to reflect on the year that was. This issue’s featured businesses, are part of the aforem...

BFM NOV/DEC 2017  

With the festive season upon us, it is a good time to reflect on the year that was. This issue’s featured businesses, are part of the aforem...