There has been some articles kicking around lately about Amazon setting up a distribution centre in Australia.

Cue some fall from the sky comments about the behemoth taking over. Jobs lost. Local retail dying etc.

And of course, as with anything that concerns our kissing cousins across the ditch – how its going to affect us here in Nu Zillund.

 

Should we be worried?

Possibly.

Amazon. Home of choice. The “everything” store.

 

Boutique and smaller retailers will still get by on customer experience. Think places you wouldn’t see in a mall, with carefully curated product lines. Along the lines of  Cuba Streets famous Iko Iko.

 

However – If I was a big retailer, in particular JB Hi-fi, Harvey Norman  or even Farmers and Whitcoulls, then Yes. I would be.

Why?

Selection! Particularly in smaller provincial centres where the stores generally have a lesser ranger and mainly just the products that’s in the latest catalogue. The stores that the locals support, but constantly get frustrated when they can’t get some lines that are in the larger cities.

“Oh but we can order that in for you” Yeah, but now I can just jump online, order it and have it in a couple of days. Probably quicker that some of the others that are still playing catchup, will be able to do.

 

Don’t get me wrong, the Pascoe family  are smart operators. Even though Farmers seems to have fallen into the “Thursday night sale” mode, the stores are still well stocked, and seem to be doing well in terms of range in apparel and homewares. They seem to have realised that the white and brown goods space is competitive and only stock a small range. And Whitcoulls just seems to muddle along, content in that middle of the ground space.

Why pick on JB Hi-fi or Harvey Norman? These both have large stores, with a lot of stock. Think easily shipped goods that fit in small packs. DVD’s, games, phones, cameras, headphones, laptops. Consumers are now so accustomed to purchasing these products without needed to touch them. Often easier to just find the cheapest price with delivery and be done with it.

Even though Harvey Norman operates on more of a local level, with the Proprietors of each franchise able to tweak their offerings, they still have large supply chains across multiple brands. The saving grace may be the higher margin bedding and homewares franchises.

These are still the higher touch offerings, and attract the weekend slow shopper. The electronics and computers however with slim margins and the competitive landscape, may just go away slowly.  Gerry Harvey was notoriously against even having a decent online presence for years. And he’s been vocal in his opposition to Amazon coming to Australia.

 

One thing to consider that could work in our favour however, they may make it easier with Kiwis with the FBA programme. “Fulfilled by Amazon” whereby Amazon takes care of the customer service, and lets wholesalers sell their product via Amazon. Yes, Amazon takes a cut, but for some companies this could be another piece for their arsenal.

And let’s not forget the Amazon associates programme where people can promote and review products and receive a commission. Think Wirecutter and sweet home in the states which are funded this way.

Does this mean a whole lotta crappy websites popping up with rubbish content?

Maybe. But google updates generally take care of those.

The latest closures of places like Topman, and the receivership and then apparent rebirth of Shoe Connection  show that apparel retail is tougher than ever. With Amazons muscle it remains to be seen how it may affect these parts too.

 

I don’t have the golden solution to the headwinds coming, but its sure going to be an interesting ride.