Amazon, the former internet bookstore that has become a $US550 billion dollar company and made its founder Jeff Bezos one of the world’s richest people, is about to roll out its retail offering in Australia to the general public.
The company’s shares started trading at under $US2 some 20 years ago. It is now trading at over $US1,150, and it famously re-invests almost all of its profit into growing the business.
The company has promised “vast selection” and “fast delivery” with its retail offering in Australia.
But how will it make that happen?
The speculation about Amazon’s impact has been the biggest talking point in Australian business this year. The retail sector is one of the biggest employers in the country, with around 1.3 million people working in the industry and an annual spend of some $300 billion, so the stakes are enormous.
In order to make itself a compelling proposition for sellers, Amazon needs to rapidly assemble a large customer base.
In the US, the company accounts for a crushing 43% of all retail transactions, with its Prime subscriber numbers exploding in recent years above 90 million.
How it partners with established Australian companies to achieve that is one of the most fascinating questions about the launch. Amazon is notoriously secretive, but we can speculate.
One potential route is telcos.
Major phone companies like Vodafone, Optus, or Telstra – which between them reach basically everyone in the country — could be incentivised to channel their customer bases into Amazon through marketing promotions or even pre-installed apps on Android devices.
Business Insider understands Amazon has held advanced discussions with at least one telco about reaching their customer databases.
The incentive for the telcos would be a small commission of every transaction made by a customer that sets up on Amazon through a promotion.
As we reported last week, Amazon will charge a commission of between six and 15 per cent on every sale of every item. Sales through a referred customer from a telco would result in a small clip going back to the telco, say between 1 and 3 per cent, over a set period.
There are other potential avenues for Amazon to build value into its Australian offering through partnering with major domestic companies.
Like, say, Qantas.
The airline has been aggressively developing its technology capabilities in recent years. It has launched a startup accelerator, Avro, investing six-figure sums into a range of startups and established companies, in a sign the airline is keen to try disruptive experiments.
Through its frequent flyer program, Qantas also has an enormous database of customers – more than 10 million of them.
It is rich in information about people’s work habits, spending preferences and, of course, travel plans. Qantas has a major partnership with supermarket chain Woolworths, and its own credit and cash card programs. The ability to book through Amazon (“Alexa, find me flights to Hamilton Island”) would be just the start.
Business Insider understands Qantas and Amazon have been collaborating ahead of the Australian rollout of the platform.
A Qantas spokesperson said in response to questions: “Qantas is constantly in discussions with other businesses about potential partnerships and as always we will provide an update when there is something to share.”
Looking forward to it.
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