Amazon’s desire to include a fresh food service in its Australian rollout will see the e-commerce giant delay its entry to market, according to an international funds manager.
Justin Braitling, chief investment officer of Watermark Funds Management, claims Amazon advised him of the move in a briefing last week.
“[The launch] has been deferred for six months — they were originally launching in the first quarter of next year,” Braitling told the Australian Financial Review (AFR). “They have decided they want to do fresh at the same time as the general merchandising offer so that has put them back six months. They want to roll the whole thing out at the same time.”
Braitling was adamant that when Amazon did enter the Australian market, it would make its presence felt.
The online retailer plans to spend the coming month collecting pricepoints on stock, then discounting its prices by 30 per cent. Braitling said the push would be aided by high prices across the Australian retail landscape, with Amazon’s motto set to be “your margin is our opportunity.”
“We spoke to the guy rolling out Amazon’s business here in Australia and in his words: ‘We are going to destroy the retail environment in Australia,” Braitling told AFR.
Braitling also revealed Amazon’s plans to open physical stores in regional areas that are hard to service through its planned distribution network.
Braitling’s claims certainly suggest Amazon is poised to shake-up Australia’s retail environment, however, other experts have questioned just how significant the conglomerate’s market share will be.
Daniel Mueller, senior equities analyst with Forager Funds Management, said online sales only account for between 7 to 9 per cent of Australia’s total retail sales at present.
“Even if they get half of the Australian market, you’re still looking at 4 to 5 per cent of total retail sales,” Mueller told News Limited.
“And getting into fresh, it’s unclear how the model is going to work. But it does raise some good points. Australian retail margins are quite high, our supermarket retail margins are among the highest in the world.”