Amazon Australia’s next big test
AUSTRALIA has a history of adopting American traditions. Halloween has become a huge thing, for example. The streets near my house fill up with little vampires and witches. But what about Amazon's Prime Day?
Will online shoppers embrace it or let it go through to the keeper?
Prime Day is on today, and in America it is a giant festival of capitalism where people go mad buying temporarily discounted merchandise online. Last year Amazon sold nearly $US2.5 billion worth of stuff in one day.
The company is now rolling out Prime Day in Australia allowing Australian shoppers to take part and it will be a big test of how the company is travelling in this country.
Amazon Prime membership is a key part of the Amazon business model. People pay to sign up for access to TV streaming, free delivery, fast delivery and other perks.
Amazon won't say how many Aussies have signed up, but they do say it has "exceeded their expectations".
Amazon Prime Day is clearly part of the strategy to get people to become members and while Amazon Prime has some cool features, it's hard to know if it's enough for Australian shoppers to embrace it.
If you visit the hard-core bargain hunters at the Whirlpool forums you find they have very little kind to say about Amazon. They are cross about prices, cross about service and they are especially cross that Amazon shut down Australian access to its overseas stores in response to the government introducing GST on imports.
But some Aussies have clearly been tempted to shop at Amazon. Amazon Australia's web-traffic has snuck ahead of both JB Hi-Fi and Kogan according to traffic website Similarweb.
Amazon's challenge has mostly centred on the fact that Australians in the Aldi era are addicted to low prices. And they are yet to convince us they are price leaders.
Shopping on their website is, for me, hard to justify. Whenever I look on there I struggle to see anything good value, other than books for my e-reader. I've bought more physical items recently on Kmart's website than through Amazon.
I remember in early 2017 hearing a very senior Australian retailer saying Amazon had no idea how expensive it would be to compete in Australia. I had my doubts about that at the time, but maybe that person was right.
Amazon Prime Day however, features some big discounts and may be able to start to swing people to believe that the site is a good place to find bargains. For example, one of the Prime Day-linked offers Amazon is advertising already is four months of Amazon music streaming for $0.99.
BUT BARELY STARTED
Of course, Amazon is not playing the short game. They are still just digging the foundations for the giant retail structure they intend to construct in our country. They're a very valuable company and, their sky-high share price shows investors are betting on them dominating the world of retail.
Amazon has very deep pockets, and as a spokesperson told me, they are spending up big to make themselves better.
"We continue to invest in building selection and services for our Australian customers through amazon.com.au. In addition to having over 60 million products available across 23 categories, as well as a vast and growing international selection through Global Store, we recently launched our membership program, Amazon Prime, offering unparalleled entertainment and shopping benefits in one package for $4.99 per month," the spokesperson said.
"We have been thrilled with the reception it has received from Australian customers."
To be fair, the price for Amazon Prime membership is lower in Australia than in the US. We pay $A4.99 a month and they pay $US10 a month.
Amazon is definitely keen to sign people up to Prime, because once they are a member they become more loyal customers.
But Australian prime membership should be cheaper than American Prime membership. In America, it entitles you to next-day delivery, and in some cases same-day delivery. That's pretty good.
In Australia, though, they promise two-day delivery. To quote the great philosopher Shania Twain, who wrote these words when Amazon was still just a bookstore "That don't impress me much."
For Australia to start to be impressed by Amazon, they're going to need to do a lot of work. This year's Prime Day is just the start. It will be interesting to check back in with Prime Day each year and see how long it takes for them to do enough to make us care.
Jason Murphy is an economist. He writes the blog Thomas the Think Engine.