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ACCC to large retailers: Stop whining about Amazon

Posted: 30 November 2017 1:13 pm


What goes around comes around.

Consumers will like it so retailers can lump it says ACCC chairman Rod Sims in response to complaints about Amazon being bad for competition in Australia.

"Amazon’s entry into Australia will be good for consumers, despite it not being good for some incumbent retailers." he said.

"In competitive markets, there will be winners and losers... some firms prosper while others go out of business. This is a harsh reality... but it is this process that drives innovation, better business practices and lower prices for all Australians."

One of the most outspoken critics has been Gerry Harvey of Harvey Norman, who has a net worth of $1.55 billion according to the BRW Rich List 2014.

"They come in and because of their power in the marketplace they can sell things as loss-leaders to make no money and send everyone broke, then put up the price." he said.

It might be a familiar tactic for Harvey Norman, which may have attempted something similar in 2008 with the failed OFIS stationary stores, all of which were shut down before the end of 2009.

The hypocritical bent of these complaints was not lost on Sims, who said it was "fascinating" that some of the complainants were among "the loudest opponents" of recent changes to Australian competition laws, designed to improve competition in Australia and support small businesses against retail giants.

Amazon was good for consumers even before it launched

Amazon didn't even have to launch in Australia for incumbents to start improving their services.

Once news of Amazon's arrival came, it didn't take long for Australia Post and retailers to suddenly figure out how to offer free shipping on a subscription package. Meanwhile, Woolworths and Coles suddenly decided to accelerate their online pickup and delivery options. And in Harvey Norman's case, the change came as an announcement that it would be matching Amazon's prices.

It looks like the mere thought of extra competition can have large retailers turning on a dime, and suddenly figuring out how to better serve their customers.

Small businesses are having the last laugh

For all their talk about defending Australian jobs, every large Australian retailer only got there by driving out countless small businesses. But despite being a large retailer in its own right, Amazon is undeniably a lot more small-business friendly than just about any large Australian department store.

In other countries, more than 50% of Amazon products sold are retailed through Amazon Marketplace, mostly by small businesses. Australia will be no different.

There's a reason small businesses are warming up to Amazon's arrival. For them, it's an opportunity to finally compete against all the Harvey Normans and other local giants that have been keeping them down.

Plus, it's a lot easier to set up shop on Amazon than it is to start your own store. This low barrier to entry for new businesses will inevitably bring a lot more competition out of the woodwork.

Australia's incumbent large retailers might be more afraid of the upcoming small business competition than they are of Amazon.

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