UK investigation could slow Amazon Prime in Australia

Angus Kidman 20 December 2017 NEWS

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Promising next-day delivery and not always delivering has the shopping site in hot water.

During its less-fun-than-expected Australian launch last month, Amazon promised that Amazon Prime, its subscription service that offers free and fast delivery for online-shopping addicts, was "coming to Australia" in the near future.

Tellingly, Amazon didn't provide a timeframe for when that might occur. Now a recent development overseas might slow down the Australian rollout even further.

In the UK, where Amazon Prime is available, Amazon is under fire for promising next-day deliveries but not always meeting that standard. The Advertising Standards Authority (ASA), which regulates that kind of issue (as the ACCC does in Australia), is considering an investigation over the problem, the BBC reports. "We have received a handful of complaints about Amazon parcel deliveries and we are at the initial assessment stage," an ASA spokesperson told the channel.

This might not result in an adverse outcome for Amazon. For example, you might argue that it's not reasonable to expect a next-day delivery to happen every single time, especially if you live in a remote area (and there are far more of those in Australia than in the UK's comparatively puny landmass).

However, regulators take a purist line on these matters. If you ask someone to pay for next-day delivery, then you need to provide it. If that's not feasible, you shouldn't let them sign up and pay for the service in the first place.

In practice, it seems that if a UK customer complains they didn't receive a next-day delivery, their Prime subscription gets a free automatic extension. That's a decent way of handling such a complaint, but if the ASA decides there's a systematic problem, it could demand Amazon change the way it describes the service.

Knowing all that background, Amazon might well pause before deciding to roll out Prime "fast and free" deliveries in Australia. Global consumer regulators chat frequently, so the issue is likely to be on the ACCC's radar soon, if it isn't already.

Whatever the regulator might do, the basic economics of delivery in Australia are also challenging for Amazon. Right now, Amazon Australia offers next-day delivery for most capital cities, but that costs $9.99 per purchase.

It would seem difficult to flip from that to charging somewhere between $100 and $120 a year for unlimited free next-day deliveries, especially if Amazon Prime Video is also supposed to be part of the bundle. I'll be watching with interest to see if Amazon can pull off this very complicated manoeuvre.

Angus Kidman's Findings column looks at new developments and research that help you save money, make wise decisions and enjoy your life more. It appears regularly on finder.com.au.

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