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EXCLUSIVE: Retailers Threaten To Axe Distributors Over Arrival Of Amazon

Consumer electronics and appliance distributors, who lack global muscle to stand up to the demands of retailers, claim that they have been threatened with being kicked out stores if they start trading with Amazon.

According to multiple sources retailers such as Harvey Norman are telling distributors that they don’t want them to deal with Amazon.

One distributor was told that he faces the real threat of being” kicked out” of Harvey Norman stores if he sells the same products that he is selling to the mass retailer to Amazon.

According to other sources Harvey Norman is not alone in what has been described as “serious threats” over the pending arrival of Amazon who in recent weeks have moved to negotiate directly with multi-national suppliers of consumer electronics and appliance goods a move that will see them bypass local suppliers of branded goods.

Several distributors of house brand products are now looking to sell the same product that they sell to Harvey Norman on Amazon under a different name.

Sources within international manufacturing companies have told a ChannelNews that Amazon has a major logistics problem in Australia, they said that the high cost of logistics coupled with the high cost of employing people has resulted in Amazon looking to deliver Goods direct from the source of manufacturer in Asia direct to both consumers and retail stores.

They claim that without this business the Australian operation could prove to be unprofitable due to the fact that Australia only has a 25 million population that is spread over a wide area.

During a visit, last week to Taiwan I was told that several Taiwanese manufacturers of notebooks and consumer electronics goods are looking at placing their entire global logistics operation under the management of Amazon.

The CEO of one local distribution company said, “these very difficult times for us, on one hand we want to trade with Amazon but at the same time we are facing the real threat of being kicked out of local retail stores where we have traded for many years”.

According to sources Amazon is offering to both deliver goods as well as manage reverse logistics for manufacturers and distributors.

Recently ChannelNews became aware that local distributors have moved to offering reverse logistics for major overseas brands. Sydney-based sound distributor Convoy is currently carrying out reverse logistics for Harmon Internationl products sold in Australia.

According to Geoff Matthews the CEO of Convoy distributors are in an excellent position to grow their businesses by offering a reverse logistics service in Australia.

To date Amazon has registered over 132 patents with IP Australia among them is a registration for their private label AmazonBasics which the company uses to market products that will compete with house brand products currently being sold by distributors to Australian retailers.

AmazonBasics will also be used to take on the likes of Aldi, Big W, WalMart and Target.

To date Amazon has already captured more than 30 per cent of all stock sold online in the US.

Amazon has also sought local trademarks for its latest concept “Amazon Go”, which only opened in the US this year and is set to be rolled out in the UK in coming weeks. ChannelNews understands that Amazon has been looking at the concept of putting Amazon Go stores and railway stations a move that will allow consumers to pick up goods on their way home.

Amazon Go allows consumers to walk in and shop without queuing to pay. Amazon’s state-of-the-art technology means the shop registers what you have taken and bills you later.

Last week Amazon lodged four trademarks around AmazonBasics with the Australian Trade Marks Office, covering dozens of categories.
According to the Australian, a recent report from research firm 1010data showing the AmazonBasics private label had a 31 per cent share of online battery sales. Amazon Basics easily outsells every other brand online, including Duracell.

According to 1010data, the online battery category in the US grew 75 per cent in the past year, but AmazonBasics grew 93 per cent.

AmazonBasics also has strength in the consumer electronics space, posing a challenge to JB Hi-Fi and Harvey Norman.

Last month Amazon confirmed it was searching for a site for its first fulfilment centre in Australia which would act as a beachhead for the arrival of its flagship retail services that would likely include groceries, streaming services and household and other consumer goods.

Some analysts believe Amazon could strip as much as $4bn in sales from local retailers.

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