One of the key questions about Amazon’s big push into Australia is whether the US-based retailer will take on supermarkets head to head.
Amazon yesterday confirmed it has acquired a 24,000 square metre fulfilment centre at Dandenong South near Melbourne which will stock hundreds of thousands of products.
Rocco Braeuniger, currently director of consumables at Amazon Germany, will be the first country manager for Australia, an Amazon spokesman confirmed.
Amazon has deep market penetration in Germany, holding about 25% of online sales, according to estimates by UBS.
The US-based online retail giant has been on a hiring spree with its jobs site showing 175 open positions in Australia.
Details of the launch of Amazon’s retail offering in the Australian market have been hotly anticipated by the industry and consumers alike.
There are some clues in Braeuniger’s CV as to Amazon’s game plan in Australia.
He is currently director of consumables at Amazon Germany and his previous roles have included Pet Supplies, Health and Personal Care, Baby, Beauty, Grocery and Amazon Pantry.
However, he hasn’t had direct responsibility with AmazonFresh, the fresh food service which would directly compete against the fruit and vegetables and meat sold by Woolworths and Coles, the two big Australian players.
Braeuniger’s experience — he’s been with amazon for more than 10 years — fits with speculation that Amazon will first push ahead in Australia with non-perishable groceries first before tackling fresh food.
Apart from the supermarkets, other retailers expected to take a hit from Amazon’s entry into Australia are Myer, The Reject Shop, JB Hi-Fi and Super Retail Group.
Morgan Stanley wrote wrote in June: “What strikes us is that the stock of the largest non-food retailer in the Australian market — Wesfarmers, which generates $22 billion in sales and $2 billion in profits from non-food retailing — has barely moved”.
Wesfarmers owns food retailer Coles, along with Kmart and Target. Morgan Stanley says Kmart had the most to lose from Amazon’s arrival, given that core product range is in direct competition.
However, UBS analysts argue that Amazon poses a bigger threat to department stores such as Myer, and those product ranges only make up about 10% of Wesfarmers’ total sales.
The UBS analysts forecast Amazon will generate sales of $3.5 billion by the 2023 financial year.