The Amazon Business Model
The Amazon executives have remained very tight-lipped about what their Australian business model will actually look like. So, what we do know? Globally, more than half of all Amazon sales are made through Amazon marketplace and this trend is expected to continue in Australia according to Mr Braeuninger.
Amazon Marketplace allows third-party retailers to list their products and sell at their own prices however they are also responsible for all shipping and deliveries. Products sold through Amazon Retail are managed entirely by Amazon. Amazon will buy the products from suppliers, set their own price and manage deliveries.
To sell through Amazon Marketplace, third-party retailers can expect to pay a monthly fee of $49.95 plus a commission of between 6 and 15 percent, depending on the product category.
Growth in Australia
While some analysts expected Amazon Australia to build gradually, Mr Braeuninger has said the rollout will be similar to that of European markets; Spain in particular.
So what did Amazon’s introduction to Spain look like?
Amazon started selling products across more than half a dozen categories in Spain in 2011. They launched Amazon Prime within months of entering the market and launched Amazon Prime Now in Madrid and Barcelona in 2016.
- Amazon Prime: Allows customers to join as a member, giving them access to free two-day shipping as well as free access to movies, songs and ebooks.
- Amazon Prime Now: Offers the same service as Amazon Prime but also offers Free 2-hour delivery on thousands of household items and essentials.
Delivery in Australia
This is where Amazon has the most potential to disrupt the market. 2-hour delivery is a massive game-changer that other businesses are going to struggle to compete with. However, we’re not going to expect to see this in Australia for quite sometime. According to Koala Safe representatives who spoke at the Sydney event on Monday, Amazon is aiming for a two-day turnaround in freight delivery. Marketplace sellers will be responsible for their own deliveries so times will vary between retailers.
So what does all this mean for Australian retailers?
According to Australian Retailers Association executive director, Russell Zimmerman, the biggest opportunity here is for small-medium sized businesses. “The biggest growth at the moment in retail sales is coming off online, so this is the right time to be putting out an Amazon,” he said.
Amazon Australia manager, Rocco Braeuninger is certainly optimistic about the Australian launch.
“We will bring thousands of jobs into Australia we will invest millions of dollars, and we will help sellers to access millions of customers here globally,” he said.
“We want to be Earth’s most customer-centric company.”
Interested in selling on Amazon?
If you think you may be interested at some point, you can sign up here. Given the little detail given by Amazon, it’d be worth signing up just to get some more information!