Article shared thanks to the Australian Financial Review on Oct 3, 2019.While Amazon has had a slow start after launching its e-commerce offer in December 2017, Morningstar analyst R.J. Hottovy believes Amazon will replicate many of the strategies that have made it successful in other markets, namely lower prices and reliable one- and two-day shipping.
Amazon Australia generated $260 million in retail sales in 2018, its first full year of operation, and Mr Hottovy believes sales will more than double in 2019.
By 2029, sales are forecast to reach $23 billion, making Australia a meaningful contributor to Amazon's top-line growth in the next decade, Mr Hottovy said in a major Morningstar report on the technology giant."We believe Amazon's playbook in the region will mirror other international geographies, with expedited shipping spurring Prime membership growth and Amazon's content offerings then unlocking future member subscription/monetisation opportunities," he said.
"Besides sharper pricing and improved fulfilment, we expect additional product categories to drive site traffic and underpin this sales growth. For instance, Amazon Australia added its garden assortment in September, just in time for Southern Hemisphere summer."
Morningstar estimates Amazon has already garnered a 3 per cent share of the Australian e-commerce market, ahead of Kogan.com with 2 per cent but a fraction of eBay's 22 per cent share."While Amazon is at a different stage in each of its international markets, we believe its longer-term objectives mirror its North America online retail segment, with a current emphasis on Prime member acquisition before transitioning to new subscription monetisation opportunities and driving increased buy-in from third-party sellers," the report said.In August, Amazon Australia's country manager, Rocco Braeuniger, left after just two years in the job to take a senior international role in Europe.Mr Braeuniger was succeeded on October 1 by Matt Furlong, a director at Amazon's North American operations.Amazon now has more than 125 million products on its Australian site, up from less than 100 million at launch, across 30 categories, up from 23 at launch.
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