Amazon Australia launch date October 2017: report

Andrew Munro 8 September 2017 NEWS

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Just in time for the gifting season.

After analysing the situation in detail, Citi Australia has predicted that the formal launch of Amazon Australia will be sometime within the next 60 days, most likely in October 2017.

"Launch timing remains uncertain and is subject to website and logistics testing, but we would expect a formal launch to occur sometime in October 2017, ahead of Black Friday on 24 November," Citi analysts said in a note.

"We expect Amazon to offer free delivery over a value threshold, with the Prime service to be offered later, potentially coinciding with Prime Day in July 2018."

The Citi prediction draws on recently set buying terms and the placement of first orders in recent weeks. The analysts have also said that they expect Amazon to continue its strategy of matching or beating the best price.

"Amazon will not have a meaningful advantage in two of its three key pillars (range and delivery, which will evolve over time) in the short term. As a result, we expect prices to be competitive in order to drive volume... This could spark a response from incumbent retailers who are intent on not being beaten by Amazon on price during the key pre-Christmas sales event."

"In our view, lower pricing will likely be the result of Amazon’s lower margin and ROI [return on investment] expectations, particularly in the short term."

Citi estimates that the impact of Amazon's arrival in the second quarter of 2018 could be $200 million, or 0.2% of total retail sales.

Citi nominated JB Hi-Fi, Harvey Norman, Myer, Super Retail and RCG Corp as the companies that will have the most exposed stocks following Amazon's entry into the market, pointing at the current vulnerability of the electronics and fashion markets.

ANZ senior economist Jo Masters also points to the recent influx of lower-priced online and foreign fashion chains like H&M and UNIQLO, which have recently been driving prices down and straining local Australian retailers, as a further problem for the at-risk fashion segment. Citi said that Amazon had targeted a full product range with key suppliers, but with its initial logistical constraints and the timing of its entry, Amazon was likely to target the "gift" segment most strongly.

For its warehousing, Citi has suggested that Amazon might secure third-party warehouses in the short term, before setting up permanent "fulfilment centres" around the country. While Amazon has not yet announced a Sydney centre, it is expected to be at the Goodman/Brickworks Oakdale Industrial Estate at Eastern Creek.

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