This article was originally published on November 23, two weeks before Amazon Australia launched as a full-service store.
An Australian business that’s already seen success selling on Amazon’s US and Canada sites has revealed what it has learned from using the electronic marketplace.
Sydney merchant GetBacktoBasix makes and sells lunchboxes, insulated bags for diabetic medications and other personal healthcare products. Founder Noelle Sadinsky has attributed the growth of her business to the listings on the two overseas Amazon sites.
“Online sellers should be excited and not threatened by the imminent arrival of Amazon in Australia. The distribution footprint in the US means there is nowhere beyond the reach of GetBacktoBasix state-side,” said Sadinsky.
While the front page of Amazon.com.au is still showing, as it has for many years, as a bookshop for the US parent company, the company reportedly sent out messages to its Australian third party merchants that a general goods site will be soft-launched at 2pm Thursday (AEDT).
Amazon now has a fulfillment centre operational in eastern Melbourne, with more sites expected in the future for faster delivery to all corners of Australia.
“The infrastructure that they will soon have in place in Australia will hugely assist in the timely and efficient distribution of product – at scale. This is a game-changer for independent sellers,” Sadinsky said.
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Sadinsky said that Australian merchants should be “looking into” private-label products, if they’re not already doing so.
“Amazon has been successful in promoting private labels and giving them scope to fight against the big players, building a credible brand identity,” she said.
“Australians by nature love to support an underdog. If retailers embrace supporting locally based up-and-coming brands, it will foster recognition and loyalty from Aussie customers.”
Confidence to shop online
Another intangible that GetBacktoBasix benefited from was leveraging the confidence of the Amazon brand name, to encourage people into purchasing online — compared to the reluctance and lack of trust they may feel on a small retailer’s own website.
“In the US, customer is king and one click purchase means Amazon really stands out from a lot of other players in the online space. We know from experience that what works in the US, more often than not works here,” said Sadinsky.
“With many of our products being seasonal in nature, the truly global Amazon business proposition provides revenue all year round.”
And similar to how Australians would buy an item from an overseas merchant if it was cheaper, Amazon Australia’s launch would see some foreign customers attracted to local offerings.
Australian merchants must be prepared for those foreign currency transactions, according to Sadinsky.
“If you are short on time and foreign funds transfer is not your speciality, get a partner. OFX helped me set up my Canadian site in four hours and they would ring me if I was slow to respond on decisions relating to currency, so it didn’t cost me money,” she said.
OFX partnership manager Ed Wiley said returning foreign currency back to Australia can become costly.
“Be aware that Amazon and the banks are often the most expensive ways to bring money home,” he said.
“For example, by using a receiving account, it’s possible to save up to 75% on margins and fees compared to Amazon, PayPal and the banks, when you are ready to transfer your money into your domestic bank account.”
Challenges for Amazon Australia
Wiley warned that Amazon’s arrival won’t be all roses, noting Australia has challenges unique from other countries.
“Fulfilment costs will be higher, as the brand will have fewer [fulfillment] centres initially. Building its Fulfilment by Amazon service may result in a slow start for the giant and there is still the potential for unseen repercussions relating to fulfilment in the world’s sixth largest country [in area],” he said.
“Similarly, given this geography, postage costs aren’t likely to be cheap.”
The cost of delivery will be a challenge for both Amazon and its third-party merchants, with research from tech firm Pitney Bowes indicating 82% of Australians want free shipping, even if it means the goods get to them a little bit slower.
In the US and some other countries, Amazon runs a subscription programme called Amazon Prime, which provides customers with unlimited 2-day shipping, streaming entertainment and e-books for $US99 annually or $US10.99 monthly.
“For those businesses that are holding back and waiting to see if Amazon’s retail offering will work in Australia before diving in, it’s worth keeping in mind that first movers on the Australian site will benefit from the curious consumer traffic that will naturally follow the launch,” said Wiley.
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- Here’s what Amazon’s arrival could mean for the Australian economy
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