Amazon Australia, Threat or Opportunity?
Amazon is preparing to launch online product sales in Australia in the next few weeks. As everyone knows, Amazon is the Western world’s largest online retailer, offering customers almost any product, delivering almost anywhere, and all at very competitive prices. Australia and New Zealand are relatively small markets, and Amazon’s arrival will be transformative. For businesses selling products in Australia or New Zealand, whether they’re manufacturers, startups, store retailers or online sellers, Amazon Australia could be a dire threat or an unprecedented opportunity, or both. It’s all about how each individual business chooses to react.
With all the sensational, doom-and-gloom press stories, it’s easy to understand see why local firms might feel threatened by Amazon’s arrival. Amazon, with its well-established platform and supplier network, is able to offer vast selection at competitive prices at a consistently high standard of service. Amazon’s scale enables it to offer services such as free delivery and local pick-up points without compromising their bottom line. How could local firms in Australia or New Zealand compete with a multinational e-commerce juggernaut? But perhaps the biggest risk would be to ignore Amazon’s arrival. Taking a business-as-usual approach risks losing customers to Amazon, and if your products aren’t available on Amazon, they’ll choose products that are offered in that channel. Furthermore, it’s a false strategy to think that you can keep your products off Amazon. Nature abhors a vacuum, and it’s the same with Amazon, your products will find your way into the Amazon channel with or without your participation. The true alternative is to consider whether you prefer your brand and products to be well-represented and properly priced on Amazon, or to be sold there by online traders completely outside your control.
At A2X, we prefer to see Amazon Australia’s arrival as an opportunity, an unprecedented opportunity for local businesses. As part of its Australia launch, Amazon will be offering Amazon Marketplace, which opens the door for third parties to sell through Amazon.com.au. That means that just about every local business with products in Amazon’s categories will be able to have them represented on Amazon Australia, marketed to Amazon.com.au online shoppers, and sold through Amazon’s finely tuned selling platform. The main options to consider for how best to sell on Amazon are:
- to develop in-house Amazon selling expertise and open an Amazon Australia merchant account;
- to appoint an Amazon specialist such as ExportX to manage your Amazon sales; or
- to leave it up to your distributors or resellers, who may or may not have Amazon brand management expertise.
Australian and New Zealand retailers who get in early and take advantage of this opportunity may benefit from first mover advantage, capitalising on the publicity associated with Amazon’s launch, and early product promotion opportunities.
To manufacturers and brand owners
What a brilliant opportunity the Amazon Australia marketplace could be for your business! The opportunity to get your brand represented online on a website visited by many more online shoppers than you could hope to achieve with your own website. The opportunity to serve customers throughout Australia at Amazon’s high level of service, means you can increase your sales reach likely beyond your current distribution. Amazon Australia could be just what you need to serve your Australian customers better.
To store retailers
Here’s a way to think about the future with Amazon operating down under. Your products are likely to find their way on to Amazon sooner or later, whether it’s stock bought from your clearance sales by retail arbitrage traders or your distributors selling to online discounters. Consider getting to the Amazon channel first, and representing your products positively to your advantage rather than forfeiting those sales to others. Maybe you have one or two stores, or maybe you have a statewide or nationwide chain of stores. No matter how many stores you have, there will be customers somewhere for whom it’s not convenient to buy from you. Selling through Amazon will be one way to serve them better. Consider taking advantages of the online selling and order fulfilment infrastructure that Amazon will no doubt be establishing for Australia-wide delivery.
To online retailers
If you’re already selling online through your own webstore, or eBay or TradeMe, you’re probably well-equipped with product catalogue data suitable for the Amazon category uploads. Why not open up an Amazon store as a new channel alongside your existing online sales?
Of course, opportunities always come with costs and risks. For retailers looking to take advantage of Amazon’s new Australian marketplace platform, you’ll be thinking about GST implications, about logistics, and setting up accounting for Amazon as an extra transaction feed is one of the tasks and costs involved in opening up a new sales channel such as Amazon Australia. It is notoriously difficult to account by hand properly for Amazon marketplace sales, fees and the dozens of other Amazon transaction types that crop up. The standard sales reports from Amazon’s Seller Central portal are complicated and often fail to match up to actual revenue earned in each accounting period. Fees and adjustments are difficult to understand, even for professional accountants. That’s where A2X comes in. The A2X cloud software service, used in conjunction with Xero or QuickBooks Online, automatically maps Amazon marketplace sales and fees into usable accounting journals, and posts automatically to the accounting system, saving hours of frustration for you and your accountant, and huge amounts in lost time and missed opportunities. The result of using A2X for your Amazon accounting? Books that are reliably accurate and up to date, don’t clutter up your accounting system with floods of Amazon transactions, but still show enough detail to let you make informed decisions about your business, day to day and in the long term. It’s all about making Amazon sales that much simpler for businesses, so they can reap the rewards without the risks. If you’re an Australian or New Zealand company planning to sell with Amazon Australia, talk to your accountant about A2X to get the accounting side of Amazon selling sorted.
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