I’ve dismissed the Amazon threat since day dot. I honestly don’t know how people still don’t get it. But perhaps it’s because I’m in the industry and I know the ins and outs of it all.
Amazon doesn’t have enough warehouses in this new continent of Australia for them to offer the same speed of delivery in the USA.
They can’t rely on $4 to $5 per hour labour costs (Mexican labour in the US is cheap).
They can’t rely on $2-3 next day deliveries from USPS. Auspost charges the public about $14 for express and at best commercial rates are $8-9. They also don’t have the volume to obtain volume discounts yet so they’re probably at $11-12. Also current largest Auspost customers are probably lobbying for them to not offer Amazon preferential rates and to support local, so I wouldn’t be surprised if Amazon isn’t getting steep discounted rates.
The population density in the US and UK is many times higher than here. We have a tiny population of 24m, scattered around thousands of square kms. The postie in London probably delivers 100-250 articles a day within his 5km radius. A similar postie in Melbourne or Sydney (paid much more here) can probably only deliver 70-80 articles a day within a 20km radius. Population density is not on their side. Delivery will always be expensive in our massive land mass of a country!
They can’t rely on dicking the consumer here. Consumer law in Australia is extremely strong and overbearing. The onus is always on the vendor, the retailer, the businesses, to bend over backwards for the consumer. something Amazon isn’t used to.
Consumers in Australia are value and price conscious after being ripped off by local retailers for decades. They have ultra high expectations from Amazon and the bar is set really high (which is always bad and expensive for a newcomer).
Amazon doesn’t have the support network it is used to have in the US. The supply chain. The footprint (you’ll be surprised to know amazon uses the various supermarkets, local newspaper agents, grocery stores, retail shops and 7-11’s to dispatch goods). The 7-11 franchises here and local supermarkets, and local grocery stores wouldn’t be keen on playing nice with this newcomer who has eroded their share prices over the last 24 months and caused so much pain just by coming over.
eBay is such a giant here in the retail game now and are spending big trying to acquire customers. I’ve spoken to a lot of people and there is a strong following with eBay, where eBay is selling a lot of products for under RRP with discounting. Amazon hasn’t spent much on marketing here, not discounted any products. I’m guessing HQ in the US is saying prove that it is worth us spending millions of dollars on ad campaigns down under, but Amazon AU team is saying it’s tough to achieve sales because there is no marketing it’s almost a catch 22 in play for them.
Customer service and policies seem to be terrible at the moment. I googled “amazon Australia” and found this very unflattering review post https://www.productreview.com.au/p/amazon.html
A few pages down, I also found a big complaint by a user on a deal sharing site about an absurd policy Amazon Australia has with returns of goods https://www.ozbargain.com.au/node/357942
They have the money and resources, so success is probably a matter of time. But I would bet that it will be a long, Long time before they even put a dent on Kogan and their current profitable streak. Amazon is a non-issue for Kogan.
I think the local JB Hifi and Harvey Norman are a bigger and more robust competitor to Kogan. They have proper businesses and store fronts, and have a brand name etched into local aussies minds whenever they want to buy electronics and furniture. The fact that they have presence on the streets makes them a bigger competition to Kogan, who’s name only pop up if you shop inline. I wonder what kogan’s strategy is to compete against these giants. Sooner or later I think kogan needs to open at least a superstore front in at least the big cities and entice old school customers who only go-to-the-shops and so have never heard of them.
Tap into this demographic and watch sales soar!
KGN Price at posting:
$7.10 Sentiment: Buy Disclosure: Held
(20min delay)