How Amazon Will Benefit Australian Businesses
An Australian who runs a digital marketing agency in the US specialising in Amazon sales claims that the launch of Amazon in Australia “Will bring enormous opportunities to brands” distributors with exclusive distribution rights, and the import industry.
Originally from Perth Kiri Masters said that she understands that retailers are concerned. She told ChannelNews that “Selling on the Amazon marketplace in a direct to consumer model is usually far more profitable for brands than selling on a wholesale basis. Amazon takes a percentage based “referral fee” (usually 15% depending on the category) on each sale, as opposed to standard wholesale keystone pricing where the brand gets 50%” he said.
“Sellers also get paid within 2 weeks of a sale rather than wholesale terms which can stretch past 60 or 90 days”.
“In the US, major retailers often look to a brand’s performance/presence on Amazon as an indicator of whether they should carry the brand in store. Buyers who are considering a new brand or product will literally pull up their product pages on Amazon during a search for information”.
He claimed that the launch of Amazon Australia will be a proving ground for brands to begin an international expansion into overseas markets including the US, UK and Europe.
“Initially, Australia will be a relatively uncrowded marketplace for new sellers. It will be easier to rank products in the search results because of less competition, and PPC advertising will be cheap. This was the scenario in Amazon’s European marketplace when it first launched a couple of years ago” he said.
He said that there will be no need for “permission”.
“Instead of needing to pitch a brand to a buyer at a major retailer, negotiate terms, and hustle to get repeat Purchase Orders – brands and distributors can be up and selling on Amazon to a whole country almost immediately”.
He claims that Amazon’s fulfillment options (fulfilled by merchant or fulfilled by Amazon) offer brands and distributors flexibility to choose the fulfillment model which works best for them – even if they usually operate on a wholesale basis and have no consumer fulfillment experience they can leverage the Fulfilled by Amazon (FBA) option and have Amazon handle logistics for them.
“This creates a cash flow benefit over selling on a wholesale basis to major retailer, by shipping out and getting paid for each unit sold, rather than dealing with fulfilling large purchase orders and the chargebacks sometimes associated with retailers damaging or returning excess inventory”.
He concluded that “Other beneficiaries of Amazon’s launch in Australia, besides local brands are third party logistics providers (3PLs) which importers will need to use to store & distribute products. He said that work will also flow down to Import agents & customs brokers and freight forwarders.