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EXCLUSIVE: Amazon Not Happy With OZ Transport Costs Rethinking Local Investment

After six months of extensive investigation of the Australian market, there is now a real possibility, that Amazon will not launch a local version of their highly popular web site.

A senior source based in Hong Kong who currently supplies Amazon has said that “current indications are that Amazon will not set up an operation in Australia”.

They claimed that the small 25M population size, the high cost of transport and large distances between cities was the main reason for Amazon management’s decision.

They claim that what is likely to happen is that the giant online retailer who overnight announced a move into white label and house brand products will offer a next day or three-day delivery service out of Asia, with thousands of new products made available to Australian consumers.

They found, It’s cheaper to ship from Asia than it is between Cities in Australia” they said.

The source who is a major supplier to Aldi and was in Australia last week, recently held talks with Amazon regarding the Australian market.
“While they would like to be in Australia they do not see a case for launching in the short term. They have met with transport Companies and distributors and they are now of the opinion that they could not deliver a profitable business model in the long term”.

“We now believe that they are looking at a new model where products will be shipped direct from Asia or the USA into Australia”.

The Wall Street Journal reported that Amazon.com will shortly roll out new lines of private-label brands that will include its first broad push into perishable foods.

The first of the brands could begin appearing on Amazon’s site as soon as the end of the month or early June, said one of people.

“Amazon is ‘carpet-bombing’ the market with new products,” said Bill Bishop, chief architect of brand consultancy Brick Meets Click. “Private label allows them to test out new prices and distinctive flavours with less risk.”

Mr. Bishop said private-label goods boast higher profit margins than name brands because companies save costs on marketing and brand development. And with Amazon’s rich trove of data, it may better predict which products will sell well to its customers.

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