Gerry Harvey Back On His ‘Amazon’ Soapbox
Harvey Norman boss Gerry Harvey is back on his soapbox, this time he is claiming that the retail market has overestimated how quickly Amazon could get land in Australia.
He claims that as a land owner he “knows” that the US online Company who at the weekend forked out US $13.5 Billion for a food Company, will struggle to get approval in under 18 months if they buy a new landmark property to operate their Australian logistics business from.
“Amazon to my knowledge haven’t even bought a block of land in Australia, let’s assume I buy a block of land tomorrow. I’ve got to buy it, pay for it, put in a development application. If that happens within three years, that’s very quick.”
“And I read that Amazon is going to be fully operational in late 2018,” he told Fairfax Media.
Retail expert Glenn Carmody, of professional services firm EY, said: “I think given the geographical challenges and population density of our market there may be an argument that Amazon would consider acquiring the distribution and logistics that they need to scale up rather than build.”
A former Amazon executive, Brittain Ladd, suggested last year Amazon would seek to use Metcash’s infrastructure as it expanded in Australia.
In what appears to be wishful thinking, Harvey said Australia – with its low population density and high labour costs – should be well down the list of places for Amazon to expand.
“For their model to work they would need 50 warehouses in Australia. Start with two – one in Sydney and one in Melbourne – and then it’s how do you deliver? That’s the best-case scenario.”
“I know how long it takes.
“I bought [land in] Macgregor [Queensland] for about $18 million, say 11 months ago. I settled six months ago and I’m still trying to get council approval, am hoping for approval within 12 months.”
The forecasts for Amazon’s Australian sales differ: Macquarie has tipped it would nab $14.5 billion in Australian sales by 2025, whereas fund manager Grant Berry suggested the online marketplace would be lucky to nab 5 per cent of Australian retail sales even over eight years.
Deloitte said Amazon would create opportunities for small opportunities to sell their wares to a huge audience, but crush big retailers.
“The bigger the retailer, the more of a threat Amazon’s entry will be,” it said. “Amazon’s most direct competitors are department stores and other large retailers with a wide variety of products. The competitive advantage of having a one-stop shop for just about anything is expected to be eroded as Amazon establishes itself in the market.”