Retailers Move To Take On Amazon’s 500,000 SKU’s With New Marketplace Operations
Australian retailers are moving to building out their own online marketplaces that will allow suppliers to range goods similar to what Amazon is currently doing, one major CE retailer is also looking at a toy marketplace.
Stock will only be ordered with a supplier when a product has been sold, a move that could put pressure on suppliers to carry more stock in Country.
The moves come in response to new information that reveals that Amazon has listed over 500,000 new SKU’s on their Australian web site since they have launched in Australia.
This represents 50 per cent growth over a four-week period in the number of stock keeping units (SKUs) offered to shoppers by Amazon, with a focus on consumer electronics and toys categories.
According to research by data analytics firm Ugam, consumer electronics and toys categories are now make up almost half of Amazon’s total assortment.
It underlines the threat to established players in the sector such as JB Hi-Fi, Harvey Norman, The Good Guys and general merchandise stores like Target, Kmart and Big W the research Company claims
The greatest assortment growth was in electronics, which grew by 100,000 SKUs, according to Ugam.
Amazon Marketplace has also made a strong play for housewares.
“Amazon crossed the 500,000 SKUs in January, and this is remarkable — in an Australian context. You can’t imagine traditional bricks and mortar retailers so quickly increasing their product range by such a huge amount,” Ugam chief commercial officer Mihir Kittur told The Australian.
Mr Kittur said one of Amazon’s core strategies was to use ever-increasing SKUs and widening categories to attract sellers, which fed into greater efficiencies and lower prices to form a virtuous cycle of growth and profitability.
“More product choices with a good experience drives more customers and then drives more sellers, and what Amazon is obviously trying to do (in Australia) is on-board more sellers,’’ Mr Kittur said.
He said the consumer electronics category was ripe with opportunities for Amazon, with shoppers typically doing significant research before buying.
“Consumer electronics migrates very quickly to online and it is generally not an instant gratification buy — you are taking your time and doing your research. Amazon lends itself well to that research, in terms of price, and it can make sellers compete.”
Analysts have been warning for more than a year that Amazon poses a huge threat to the nation’s $300 billion retail sector, especially in consumer electronics, toys and housewares — which have now emerged as fast-growing categories.
Last year Morgan Stanley warned that more than $800 million in earnings would be stripped from chains such as JB Hi-Fi, Harvey Norman and Myer.
Morgan Stanley estimated Amazon will generate as much as $12bn in sales by 2026, with Wesfarmers (owner of Coles, Target, Kmart, Bunnings and Officeworks) hit hardest with $96m — 19 per cent of its group earnings — lost. It forecast Woolworths will lose $92m, Harvey Norman $86m and Myer $55m.
Mr Kittur said clothing and fashion apparel could be the next category to be threatened.