Shoppers in Australia on Amazon

Shoppers in Australia are most likely to turn to Amazon’s new Australian site for electrical appliances, followed by clothing, shoes and cosmetics, according to UBS research. Courtesy: Sydney Morning Herald

Electronics retailers such as JB Hi-Fi and Harvey Norman beware: Shoppers are most likely to turn to Amazon’s new Australian site for electrical appliances, followed by clothing, shoes and cosmetics, according to UBS research. 

Such items are likely to make up more than 60 per cent of Amazon’s local sales by fiscal 2023, the global investment bank estimates. Baby Bunting, Supercheap Auto and the big supermarket chains on the other hand may breathe a sigh of relief looking at the investment bank’s findings.

Researchers surveyed 1,008 consumers on their shopping preferences, and found 42 per cent of respondents expect to spend more online when Amazon launches.

Amazon’s highly anticipated local launch had been widely mooted to kick off on Friday, to coincide with the global Black Friday sales event – one of the year’s busiest shopping days around the world. However, following a presumed soft launch invisible to most shoppers on Thursday, analysts at Citi said Amazon’s Australian site was now likely to launch by next week, later than expected. 

And with the company expected to start out with smaller volumes and a limited product offering, the risks for local retailers this Christmas season would “likely be restrained”, Citi said.

Aussie retailers ‘well placed’

UBS said the global e-commerce giant’s market entry is set to accelerate Australian shoppers’ shift to online, judging by the experience of countries such as Italy, Spain and Mexico, where the growth of online shopping doubled after Amazon’s market entry.

Amazon’s foray into Australia has all the hallmarks of becoming a resounding success as the country still has more demand for online shopping, UBS predicts, with 51 per cent of all respondents in its survey saying there was a “strong likelihood” they would shop at Amazon. And existing retailers would have to contend with “more empowered” shoppers who are increasingly likely to price check, UBS warned.

But not all is lost for local stores, said the bank’s analysts.  

Aussie retailers are “well placed” to compete, they found, with local websites such as Australian brands’ and department stores’ online offerings and e-commerce stores such as Kogan featuring prominently in Australians’ online purchases. As local brands stepped up their online presence, the market share of international online shops actually dropped to about 20 per cent from 27 per cent in January 2012, the report shows.

“Click and collect” offerings, where shoppers choose goods online and then pick them up in bricks and mortar stores, could be a major opportunity for local retailers to bolster sales and defend their turf. With just 9 per cent of online shopping collected in stores, click and collect shopping could become the “key driver of online growth for traditional players”, UBS said.

All in all, sharemarket investors had been too pessimistic in their sell-off of local retail stocks, the bank concludes. Shopping centres and bricks and mortar stores would still have a place in the era of online shopping, even if they become less relevant.

“We still see a future for stores given about 81 per cent of purchases involve an in-store experience”, its analysts said. “We found that the key reason for consumers continuing to shop in-store remains the product and a desire/need to ‘touch and feel’ the product”, “followed by the in-store experience”.

But while malls would continue to have the scope to attract shoppers, it might be a different story for stand-alone retailers, the report warned: “High-street locations will feel the greatest impact.”