Online shopping giant Amazon underwhelms on Australia debut

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Amazon's Australian website has launched with fewer products and smaller discounts than widely expected, with analysts saying the online giant may not trouble traditional retailers this Christmas.

Aussie businesses are bracing themselves for the imminent arrival of Amazon, employing various new strategies.
Source: 1 NEWS

Morgan Stanley analysts are not impressed with day one of Amazon Australia and expect many ASX-listed retailers that were sold off ahead of Amazon's launch, including JB Hi-Fi, Harvey Norman, Myer and Super Retail Group, will regain some ground.

Shares in Myer, JB Hi-Fi, Harvey Norman and the Super Retail Group all recorded gains during morning trade.

"While clearly Amazon will improve its offer over the coming years, we think the prospects of a pricing reset is low, ranging is relatively weak and delivery times are not as favourable as existing leading retailers," Morgan Stanley analyst Thomas Kierath said in a research report.

"Retailers that have been sold off during 2017 on the impending Amazon launch should see a reprieve, in our view, given a less disruptive launch than expected.

"Longer term, we see department stores as the losers from Amazon."

The global e-commerce giant has been selling Kindle e-reader devices, audio books and content from its Australian website since 2013.

But overnight it finally put to rest nearly a year of speculation around the rollout of its full marketplace in Australia by going live with 20 categories with merchandise ranging from electronics, clothing to power tools.

Most of the retailers are small third-party players and there appears to be a limited range of market-leading brands.

Morgan Stanley said in sports goods, Amazon's only leading brands were New Balance and Adidas; by comparison the Super Retail Group's Rebel Sport stores stock Nike, Asics, Adidas, Under Armour, New Balance and more.

The analysts also compared prices of 29 items on the Amazon Australia store with prices at JB Hi-Fi, Rebel Sport, Myer, Coles and Woolworths.

"Consumer electronics is about 13 per cent more expensive on Amazon, apparel and sports is largely in line with leading retailers and dry grocery is 13 per cent cheaper on Amazon versus Coles and Woolworths," they said.

Amazon's delivery time and costs look in line with existing retailers and in some cases could be slower and more expensive, Morgan Stanley's team said.

Amazon's country manager, Rocco Braeuniger, has not given interviews but said in a statement the retailer was focused on customers.

"By concentrating on providing a great shopping experience and by constantly innovating on behalf of customers, we hope to earn the trust and the custom of Australian shoppers in the years to come," he said.

Amazon is known for sacrificing profit for sales through aggressively low prices.

Retail analysts at Citi believe JB Hi-Fi and Harvey Norman will be among the hardest hit by Amazon, although Harvey Norman chairman Gerry Harvey said today he was not worried and warned consumers to be wary of its promises to deliver before Christmas.

"If you order something off Amazon, heads you get it, tails you don't," he told Seven.

He was confident Harvey Norman would not be affected by Amazon, but said he was concerned with its business practices.

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