Join

Enter Details

Comment on stories, receive email newsletters & alerts.

@
This is your permanent identity for Business Insider Australia
Your email must be valid for account activation
Minimum of 8 standard keyboard characters

Subscribe

Email newsletters but will contain a brief summary of our top stories and news alerts.

Forgotten Password

Enter Details


Back to log in

Morgan Stanley's first impression of Amazon Australia is 'the offer isn't that competitive'

Adam Berry/Getty

The initial scorecard on the Amazon launch in Australia — the prices aren’t that competitive and delivery times are generally no better than other retailers.

Analysis by Morgan Stanley shows the launch of Amazon Australia won’t disrupt local retailers, at least in the short term.

“The offer isn’t that competitive,” write analysts Thomas Kierath, Monique Rooney and Peter J Marks in a note to clients.

However, they note: “Clearly Amazon will improve its offer over the coming years.”

Business Insider also did its own quick price comparison of products for sale, finding that some items are cheaper on Amazon, but the end price depends on the cost of delivery.

The US-based retail giant today launched its full retail offering, with hundreds of thousands of discounted goods and one-day delivery, on its Australian website.

“We see the prospect of a retailer pricing reset as low, and 2017 retailer sell-offs as overdone,” says Morgan Stanley.

“We analyse pricing, range, delivery, and believe AMZN (Amazon) is unlikely to ‘disrupt’ retailers short term.”

Morgan Stanley says delivery times are not as favourable as existing leading retailers.

Retailers sold off during 2017 on the impending Amazon launch, including JB Hi-Fi, Myer and Harvey Norman, should see a “reprieve”.

A short time ago, share prices were trending higher with Harvey Norman up 2% to $4.08, Myer 1.5% to $0.78 and JB Hi-Fi 1.2% to $24.39.

“Longer term, we see department stores as the losers from Amazon,” the analysts write.

Morgan Stanley say the width and depth of the Amazon offering is very low.

“While Amazon has launched 20 categories we struggled to find market leading brands within the range,” the analysts say.

“For instance, in the Sports category Amazon’s only leading brands were New Balance and Adidas; by comparison Rebel Sport stocks Nike, Asics, Adidas, Under Armour and New Balance plus others. Within many product categories especially those sold by marketplace retailers, stock availability was low.”

Many retailers noted “only 1 left in stock – order soon” which is surprising given the products have only been offered from today.

Morgan Stanley 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 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.

“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,” the analysts say.

Morgan Stanley says Amazon’s delivery times and costs look in line with existing retailers, perhaps even a little slower and more expensive.

Metro delivery times of three to five days are in line with retailers and guaranteed next day delivery for $9.99 is the same price as JB Hi-Fi’s same day service.

“So we doubt that consumers will purchase on Amazon for the speed/cost of delivery,” the analsyst say.

“Amazon notes its Prime service will be launched in mid ’18 when we’d expect delivery times to reduce.”

NOW WATCH: Money & Markets videos

Want to read a more in-depth view on the trends influencing Australian business and the global economy? BI / Research is designed to help executives and industry leaders understand the major challenges and opportunities for industry, technology, strategy and the economy in the future. Sign up for free at research.businessinsider.com.au.