And while there been speculation that Amazon’s arrival will “destroy” local retailers with fast shipping and super-cheap prices, it’s worth remembering that local retailers are an essential part of the Amazon offering.
Amazon has its own product range, but also runs Amazon Marketplace – the company’s version of eBay without auctions – which allows third-party retailers to sell products on the Amazon website at prices they set. The can lead to some surprising results. For example, we found the Australian telco Amaysim, which most people think of as a discount mobile phone plan provider, offering a 128GB iPhone 7 Plus on Amazon for $1,375, which is a surprising $176 more than you can get it from the Apple store.
We asked Amaysim why. Here’s what they said:
“In some instances, we are able to offer products to a lower price than the manufacturer (check out our Samsung offers). In other instances our pricing might be slightly higher due to supply and demand. We have access to global stock and prices can actually change everyday,” they said.
It’s a reminder that the old rule of retail – it pays to shop around – still applies in the digital realm.
We previously compared prices in Amazon’s white-label electronics range, and found that they cost a lot less than the alternatives from Australian suppliers.
But the sample of products we looked at today now that Amazon Australia is live tells a slightly different story. Branded products were sometimes more affordable, but in some circumstances they were wildly more expensive.
Analysts at Morgan Stanley also compared prices on 29 identical items on the Amazon Australia store with leading retailers, JB Hi-Fi, Rebel Sport, Myer, Coles and Woolworths.
Based on the bank’s analysis, consumer electronics are 13% more expensive on Amazon, Apparel and Sports are largely in line with leading retailers, but dry grocery is 13% cheaper on Amazon versus Coles and Woolworths.
So today’s launch creates an interesting first impression for the global juggernaut, which won’t be short of cash as it rolls out in Australia and embeds itself in the retail landscape with the same success it’s had in 13 other jurisdictions. Amazon is only just getting started, and generally take a few years to really get going – the company’s still to build its Sydney. No doubt the Marketplace sellers will also sharpen their offerings if they want to grab market share too.
As the Morgan Stanley analysts observed: “We note Amazon isn’t always uniformly cheaper than the competitors, but does go after certain categories (usually consumer electronics), however, based on our analysis it looks to be groceries.”
There more work to be done and of course the subscription service Amazon Prime isn’t launching until mid-2018.
But here’s our sample of products from Amazon and Australian retailers compare and how the prices compare.
$60 cheaper on Amazon – Brooks Men’s Liberty 9 Mesh Cross Training Shoe
$42.95 cheaper on Amazon – Fitbit Charge 2
$200.88 more expensive on Amazon – GoPro Hero5
$1,233.95 more expensive on Amazon – Lenovo ThinkPad P51 laptop
$11.14 cheaper on Amazon – Jamie Oliver’s 5 Ingredients – Quick & Easy Food recipe book
$591.97 more expensive on Amazon – Samsung Galaxy S8+ 64GB
$176 more expensive on Amazon – iPhone 7 Plus
$40.02 cheaper on Amazon – LEGO BB-8™ Play set
Same price – Finish Powerball Quantum Dishwasher Tablets
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