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COMMENT: Rebranded Catch & Kogan Set To Get Smashed By Amazon

Online retailer Catch of The Day, has rebranded itself Catch ahead of the launch of Amazon, but like Kogan I suspect that both online retailers are set to get a rough beating up by the big US online retailer when they finally launch in Australia.

The problem for these local online retailers is that the core of Catch and Kogan customers are already predisposed to shopping online.
These customers like bargains and are prepared to take risks when shopping in online stores.

When Amazon finally launch, in Australia their choice of goods will go from a few thousand at Kogan and Catch to a few million and they will be cheaper than both Kogan and Catch currently offer.

Compounding this Amazon will be offering top end branded products up against similar offerings from the likes of Kogan who since listing has gained traction by expanding their house brand offering to compete with the likes of JB Hi Fi.

Amazon’s recent investment in its own private label products has been paying off according to data analytics platform 1010data with the big online retailer recording record sales for Amazon Element products which includes the likes of baby wipes and batteries, products that are sold by Catch.

According to the research Amazon Elements which was launched late in 2014, wipes have seen 266 percent year-over-year growth, and customers who view Amazon’s product are three times more likely to purchase than the category average, the new report states.

that Since Amazon confirmed it will roll out its full online offering in Australia, shares of major retailers including Kmart, Target owner Wesfarmers, JB Hi-Fi, Harvey Norman and Myer have been battered.

Analysts have been warning that the nation’s retail sector is in for a major shakeup as seen in the US and UK where the eCommerce behemoth’s low prices and quick deliveries drove many out of business.

AAP recently reported that Catch Group chief executive Nati Harpaz is optimistic that there is room for smaller online players and, in a surprise move, has opened the site from being purely a seller of brands to being a platform for other retailers.

The only problem is that Amazon’s marketplace is where local retailers want to be as opposed to a small local player who will end up, picking up Amazon leftovers.

Harpaz claims that Catch is now ready to transform into a platform like eBay and Amazon.

The big question is why did they not do this five years ago.

Catch wants to go from having a range of about 30,000 products to two million by December
.
Today Amazon has over 30 million products listed in their marketplace including most of the brands that Catch is spruiking.

Compounding this is that most of the distributors that ChannelNews have spoken to want to be in the Amazon marketplace as opposed to a local marketplace.

Also set to be there is JB Hi Fi, Harvey Norman, Officeworks and a host of other retailers who will be looking for brand and product traction off the back of the pulling power that Amazon can deliver.

“No one can downplay Amazon and what it does but at the same time there is a lot of successful online businesses that can co-exist,” Mr Harpaz told AAP.

He said Catch, which sells more than two million products a month and has 70,000 club members, has several points of difference to Amazon.

This is small fry when you consider that JB Hi Fi online has over 2.6M customers and attract over a million visitors a week to their web site.

Both Harvey Norman and Officeworks deliver similar numbers.

“Amazon is such a big marketplace and you can get lost in it,” Harpaz said.

What needs to be understood is that Amazon has both the software and artificial intelligence that will be used to take both Kogan and Catch down.

They have already registered 132 patents for their online software in Australia and if you listen to US or UK retailers the problem is that as these retailers change the price of a SKU, the Amazon software is automatically changing the price of their product because their software has picked up the change using artificial intelligence which is used to track competing retailers web sites.

“With Catch, you know you’re going to get the eyeballs and you won’t get lost among so many other brands and products.”

Harpaz said it was also a misconception that Amazon is the cheapest.

“It’s our intention to offer the best pricing in the market,” he said.

He added “Some of the bigger retailers are putting their heads in the sand and are not putting strategies together to fight Amazon.”

Mr Harpaz said there are opportunities for major retailers, including Woolworths and Wesfarmers, to work with online players like Catch in providing better shipping, pricing and product deals.

What Kogan and Catch need to realise is that Amazon is currently working with brands to become their global logistics Company. They want to take a product from a manufacturing line into their global logistic operation. It will then be delivered by Amazon to retailers, B2B Companies and consumers.
This will deliver operational scale that Catch and Kogan will struggle to compete with.

The group – which also owns online travel deals, grocery and mum and bub retail sites Scoopon, GroceryRun and Mumgo – said it was on track to make $500 million in sales over the next 12 months.

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