Experts Believe Amazon Will Destroy Australian Retail

Image: iStock

Expert analysis has predicted a shocking result for Australian retailers within the first five years of Amazon entering the local market. We're talking major losses for JB Hi-Fi, Myer and Harvey Norman.

The figures are so damning that Harvey Norman may have already lost market value in part based on the analysis, with Gerry Harvey taking a $100 million hit to his personal wealth.

The analysis, conducted by Swiss investment bank Credit Suisse, found Amazon setting up shop in Australia could directly result in Myer losing anywhere up to 55 per cent of its earnings over the next five years, according to The Australian.

Myer is the retailer at most risk, despite revealing online sales "make up less than 1 per cent of its total turnover" following a website crash over Christmas a few years back.

Also at an "above average risk" along with Harvey Norman, are JB Hi-Fi, Supercheap Auto, Rebel and Amart Sports, BigW, Kmart and Target.

Harvey Norman hasn't acknowledged the implications of the report, saying it doesn't know why its shares dropped by 8 per cent.

Credit Suisse analyst Grant Saligari said that many retailers "would not be competitive with Amazon".

The Good Guys is at lesser risk than the other major retailers, both because its products are bulky (difficult to ship) and its gross margind and operating costs are "relatively low".

And this is all without Amazon even confirming it's arrival on Australian shores. There have been hints, though - inlcuding job postings in Queensland and leaks of delayed launch plans to maximise impact.

We'll keep you updated as we hear more.



    No sympathy for any of these retailers, they have been screwing Australian consumers for a long time.

      The retailers themselves? Yeah, fuck 'em.

      The people they employ? That's more concerning. I'm all for cheaper prices being shipped directly to my door (because I'm a lazy shift worker), but I feel for the people who will undoubtedly have their jobs threatened by the major shake up.

    I feel for the shop assistants that will be screwed by HN and co as HN and co try to make up for dropping profits.

    When is Amazon actually going to start trading here?

    I'm living in Seattle at the moment and I have to say that Amazon is absolutely amazing over here. Especially with prime. Next to everything arrives in 2 days or less - a lot of stuff I can order from work in the morning and it'll be on my doorstep when I get home. And because shipping for prime items (which is about 80% of Amazon's offerings) is free, you can order dumb shit that you'd normally head down to a store to buy. I bought lightbulbs recently for example, because that way I didn't have to take the 5-minute drive to the local Home Depot.

    However a lot of what makes that possible is the godawful minimum wage over here (so they can have more drivers doing deliveries) and the fact that the postal service is miles ahead of Australia Post in both cost and service quality, and the courier services like FedEx and UPS are much cheaper as well.

    Amazon will only be a major force in Australia if they can simultaneously fix Australia's woeful logistics. The won't make much of a dent if it still costs you more than the item itself to ship everything. I can't see them being able to offer free shipping with Prime in Australia if they're going to get gouged by AusPost and Friend's usual astronomical pricing.

      I bet the report just assumed we had first world logistics infrastructure.

      I can tell you we don't have woeful logistics. I work for a company that does 3M+ deliveries a year and rather large packages. Consistanty next day delivery from syd to melb, melb to syd syd to bris. Same day same city to same city all at cheaper than you think. Its actually the onliners letting you down by intentionally taking days to pick pack and ship and also you need a critical mass by paying for line haul freigters every day between major cities. Our logistics are not sub par

        You know what? That's great. But Aus Post is a real fucking problem.

        Here's a little example why I think they are. Now I live in Northern NSW right, and I often order from businesses that are just over the border in either the Gold Coast or somewhere in Brisbane & often Aus Post is their only fucking option. Now in theory I should see whatever it is the day after it is posted, right? Wrong. It usually takes a week or more to show up on my door step, why? Because it goes to Underwood sorting centre just outside of Brisbane, then to Chullora in Sydney, then back to Underwood & then usually to my local sorting centre then a day or so later it gets to me..

        I've made complaints to Aus Post about this they shrugged it off, just like they shrugged off their courier ignoring my presence & putting a card in the mail box or the time they delivered mail that had been opened & the contents missing..

        When I have the option I get stuff couriered, Fast Way are my favourite, they're always half the price as everyone else & deliver same day if it's coming from the Gold Coast or next day from Brisbane most times.

    Can't wait!
    The local retailers need some schooling in things like low prices, online stores, customer service and free delivery. And less douchbaggery from the in-store sales people wouldn't go amiss.

      And the people who work in them need to lose their jobs? Maybe they'll take yours.

        That's not what's happened in other markets Amazon have entered.
        But ultimately, yes, if someone works for a badly-run uncompetitive business and that business goes broke then some people will lose jobs. That's life. And any interference in that, such as chucking billions of dollars at Ford and Holden, doesn't​ fix it. Just prolongs the inevitable.

          Ford and holden are a bad comparison to make as all auto manufacturers and I say all because I can't think of one that isn't are propped up by their respective governments.

          But as for loosing jobs, that's part of progression, people whinge retail staff will loose jobs but don't bar an eyelid for people in sectors like energy production who loose jobs when power stations close down, or taxi drivers and uber.

    The figures are so damning that Harvey Norman may have already lost market value in part based on the analysis, with Gerry Harvey taking a $100 million hit to his personal wealth.

    Woohoo! Best news I've heard about Gerry Harvey in a long god damn time.

      He'll probably claim that he didn't see it coming....for the last 20 years! haha

      I'd welcome that too. I don't know how it is in the eastern states but in Perth all retailers try and fob us off with with last years' models at THIS year's prices. JB-Hifi is pretty good though and often has up to date models, but Harvey Norman pretty much never does. They will try and con the consumer by selling the cheapest old rubbish at premium prices. Not to forget their crappy "extended warranties" either.
      They're not just bad at completing with online sellers, they're dishonest and they sell crap.

    So what I'm taking away from this so-called "damning report", is that the retailers stealing our money right now, will have to work a damned sight harder in future or risk being overtaken by more innovative start-ups that are willing to take Amazon head on? May the best and fairest win out!

    Yet again, this comment went straight to moderation after it was edited? Please fix this issue. Thanks

    Last edited 21/03/17 11:51 am

    So what I'm taking away from this so-called "damning report", is that the retailers stealing our money right now, will have to work a damned sight harder in future or risk being overtaken by more innovative start-ups that are willing to take Amazon head on? May the best and fairest win out!

    All I see there, are retailers with outdated business models, who've had ample time to adapt to the changing digital landscape. It's the equivalent of farmers complaining about changing growing conditions and not adapting to their environment.

    Hrmmmmmmmm.... Will it be that drastic for Aussie retailers? I think that depends on how good Amazon is here in Aus. How comprehensive is the product catalog going to be? Are we going to have the same amount of variety as the US does? What happens if 80% of the products have to be ordered from overseas warehouses? Does everything come with an Australia Tax despite them shifting all of their profits overseas? We know virtually nothing about how it plans on doing business in Australia so It feels WAY to early to be making these kinds of claims, surely. They could totally balls it up.

      Stop putting logic into a good witch hunt.

    I would have no problem with Amazon if they where a decent corporate citizen. But these guys pay zero tax destroy thousands of jobs and decimate small business. What are you cheering for people. i am sure your all employed by somebody who relies on the incomes of people that will lose there jobs to giants like these. I know get with the times right? Just remember next time you need a service that no longer exists because it is no longer affordable, because these mutli national assholes don't pay their way.

      Why pay tax to a foreign country when they don't have to?
      Once they are here as a registered business on our soil employing our people. That's another story.

    Retailers will adapt - just look at the online streaming services. Netflix forced everyone else to get their shit together. The only reason Stan now offers a $10 service and finally offline access is because their competitor is offering it.
    Where was Stan and Foxtel Go before Netflix?

      Before, there was foxtel, foxtel charged (and continues to charge) 50-100 bucks a month.

      That being said, retailers will have trouble adapting, due to the fact that they all have bricks and mortar shop fronts that cost plenty of cashola to keep running. Moving to a direct fulfillment from warehouse model is never as easy as it seems.

        Personally, bricks and mortar store works as long as their online offering is just as comprehensive / solid. I recently bought something from good guys online (ebay) and was able to collect it at their local store + when in there, I got something else that I wouldn't have bought if I didn't get their ebay item in the first place.

    There are plenty of bricks and mortar store chains still functioning perfectly fine in the US (Walmart, bestbuy, etc). As soon as the stores here start improving their efficiency and stop having large markups they'll be fine. People are still going to want to see/touch the product before they buy it for anything remotely expensive, and once they walk into a store, a whole different mindset is at play with salespeople selling them product.

      Agree, Amazon aren't going to decimate their competition, but it will give them some good kick in the arse.
      I'm still picky with some products especially tv and monitors. I'd pay more to go into a bricks and mortal to see the colour in person than just on some marketing filled pseudo spec sheet.

    Myer is the retailer at most risk, despite revealing online sales "make up less than 1 per cent of its total turnover" following a website crash over Christmas a few years back.

    That "despite" to me would be a large reason as to why they are vulnerable. They've completely failed to diversify the business to cater for the segment of the market that want to shop online and are instead turning all attention towards competing with David Jones, who themselves presumably are weak in the online arena.

    People shopping online be it Amazon or another retailer can quickly check other online outlets, but Myer and other retailers haven't really established a mindset that they'd be a place to check online for.

    Experts Believe Amazon Will Destroy Australian Retail
    Fantastic lets hope Harvey Norman is first to go.

    I can't believe it's taken this long to get Amazon in Australia. It's absolutely ridiculous and embarrassing to say the very least.

    I don't Amazon will do that great with branded products. Issue they will face is they have to obtain licensed products from the Australian License holder. Sure they can source no name office products, groceries etc but any big label product is going to be the same price give or take a dollar.

    I remember Toys'r'us entering Australia, claiming they will force the prices to drop. Sure they dropped a little but they still couldn't discount the large labels as the license owners had them over a barrel! look at them now, no cheaper than K-mart, Target or Big-W.

    I assume Amazon's new warehouse in Australia is going to be fully automated? No way will their business model allow them to operate within Australian labour laws.

      You will see some sort of "australia tax" for them to operate here.

        unless they do a Kogan and operate mostly out of nearby Hong Kong / Taiwan etc?

    Might this be part of the reason for JB Hi Fi's purchase of The Good Guys? Protection against possible competition from Amazon?

    Living out in the WA bush I can often get things quicker from Amazon in the states than most companies in NSW or Vic. Lowes and Jaycar are the exceptions to the above.
    Amazon have made online shopping hassle free and simple. Perhaps the retailers that are going to be affected need to study the Amazon experience and learn from it.
    Where possible I will shop from Aussie retailers but too many make it difficult with their laughable attempts at E commerce.

    But how do we know that Credit Suisse isn't just talking their book? They could just be saying this because they are already short the retail sector. You need to publish their holdings/disclaimer when you quote a broker and The Australian didn't.

    On Amazon, I got sick of seeing a hard to get item with the comment "This item does not ship to "

      Clearly you have never heard of a shipping diverter like myus [dot] com

      Look it up.

      You're welcome.

    If ebay and aliexpress hasnt killed australian retail, im sure a 3rd similar service with similar profucts will get the job done

Join the discussion!

Trending Stories Right Now