Amazon Cuts Deal With Australia Post, Hi Fi Stores + Carriers Set To Be Targeted
Harvey Norman and JB Hi Fi are the two retailers that are most under threat from Amazon, claims Citigroup, however ChannelNews can reveal that specialist Hi Fi retailers and distributors along with phone carriers are also set to be targeted.
A recent survey of several major brands has revealed that the bulk of suppliers to consumer electronics retailers in Australia are welcoming the arrival of the US online claiming that it will “cut the cost” of dealing with retailers and carriers such as Telstra, Optus and Vodafone who demand certification fees and marketing support prior to ranging a smartphone on their network.
Vendors claim that these “type of costs” push up costs in Australia.
We can also reveal that Amazon has cut a major deal with Australia Post with the two organisations now looking at their supply chains and the merging of both the Amazon and Australia Post networks into one “seamless” network. Australia Post is also looking to take advantage of their China Post relationship to ship goods direct to consumers within 24 hours.
Citigroup says electronics retailers could lose as much as $1.7 billion in sales, or 7 per cent market share within the first 12 months of Amazon launching in Australia.
Amazon sources in Asia, have told ChannelNews that one category that stands out to be targeted is the Hi Fi market with one Amazon executive claiming that Australians are asked to pay “an extraordinary amount” for Hi Fi equipment.
Investigations by ChannelNews reveal that with a pair of KEF Reference 1 bookshelf speaker that is on sale at The Lifestyle Store in Sydney for $14,999 is on sale at Amazon for $7,999 or A$10,665. This is a saving of close to $5,000. In some stores the speakers are $15,999 which is the recommended retail price.
A Sony VPL Projector HW 40ES currently selling at Eastwood Hi Fi for $3,999 is on sale at Amazon for $1,569 or A$2029 which with 10% GST makes the difference a staggering $1,741. Shipping on these goods via Australia Post is $54.
A survey of 40 products sold via specialist Hi Fi dealers spanning, Bose, Yamaha, Denon, Sonos, and Bowers + Wilkins revealed that price differences ranged from 25% up to 100% with most Hi Fi products researched.
For smartphone makers, such as Motorola, Sony, Samsung, Apple and HTC it means that they don’t have to pay any certification fees to be on a network. These fees can run to the hundreds of thousands.
According to Danny Adamopoulos Product Manager for Motorola in Asia Pacific one carrier in Australia recently asked $200,000 for a 12-week certification fee to upgrade their latest Motorola Z smartphone to Android 7.0 “Nougat.
According to a Sony Mobile communications executive in Singapore the Japanese Company is looking to lift sales of their smartphones in Australia with the arrival of Amazon.
He said that Sony was currently selling tens of thousands of Sony Xperia smartphones every month via Amazon.
“We don’t have to deal with retailers, we cut out marketing rebates and customers get a product that is up to 40% cheaper than what Australian retailers and carriers are currently selling the same device for they said”.
According to Adamopoulos, consumers who buy an unlocked smartphone on Amazon can still connect them to a local network. “The Australian Competition and Consumer Commission has already ruled on this” he said.
The recent report by Citigroup estimated that Amazon could snare more than $4 billion in sales within five years of rolling out its general merchandise and fresh food offers in Australia.
Auto, sporting goods and outdoor leisure retailer Super Retail Group could lose 4 per cent.
Woolworths and Australia Post unveiled a deal this week where Woolworths will install at least 500 parcel lockers in supermarkets to provide shoppers with parcel collection and returns services. Woolworths hopes that consumers who use the lockers to pick up parcels and online deliveries from retailers such as Amazon spend money in its stores.
JB Hi-Fi chief executive Richard Murray recently played down the threat of Amazon, saying the electronics retailer is well placed to compete thanks to its network of almost 300 brick and mortar stores and digital services, its low cost of doing business and competitive prices.
“Our industry-leading low cost of doing business is a key enabler and competitive advantage and ensures we can deliver great value every day to our customers,” Mr Murray said. “Our staff are another key point of difference, delivering great service and experience instore and online every day.”
Harvey Norman chairman Gerry Harvey remains unfazed about the Amazon threat, saying: “I’ll worry about that when it happens. It may happen or it may not.”
Mr Harvey says Amazon is unlikely to sell electricals and furniture – Harvey Norman’s biggest categories – in large enough quantities to pose a threat and would need to build warehouses and distribution systems across the country to match its customer service.
“We have distribution in every major town in Australia,” he said, pointing out that it could cost $200 to send a $400 product to towns such as Kalgoorlie,” he said.
“We have dealings with all the major suppliers and if they do a deal with Amazon which undercut Harvey Norman that would be dumb – they’d have no showrooms left and no distribution.
“As far as furniture is concerned, it just doesn’t sell on the internet.”