20 April 2017, Written by David Simmons

ONLINE retail giant Amazon has finally confirmed the company is launching in Australia to take a major slice of the country's $300 billion sector, as Morgan Stanley warns local retailers they could "get the life squeezed out of them".

The rumour has been circulating for years and, in a brief statement, the company confirmed Amazon's base retail activities will launch soon in Australia.

"We launched a Kindle store on Amazon.com.au in 2013, and we now have almost 1,000 employees in the country," says an Amazon spokesperson.

"The next step is to bring a retail offering to Australia, and we are making those plans now.''

"We are excited to bring thousands of new jobs to Australia, millions of dollars in additional investment.

"We are optimistic that by focusing on the things we believe customers value most - low prices, vast selection, and fast delivery - over time we'll earn the business of Australian customers."

The company is likely to place its warehouse in Sydney or Melbourne and is also taking interest from Australian retailers who would like to sell on the Amazon Marketplace, where the company sells third party goods.

Amazon's entrance into Australia is bad news for local retailers, who will likely struggle to compete with the online behemoth which has destroyed traditional retailers and department stores in the US.

Analysts at Morgan Stanley this week dubbed the company a "digital monster" and a "country killer", ready to squeeze the life out of Australian retailers.

"While Amazon might take time to build up momentum in this country, it hangs like the sword of Damocles over corporate Australia," the Morgan Stanley report says.

"Cyclical forces are hurting retailers today, but the secular threat from Amazon is a far more worrying trend."

In North America, the company offers a suite of services, including Amazon Prime; a subscription service which gives members free two-day shipping and access to the company's video streaming service Amazon Prime Video.

It also offers one hour delivery of goods and has moved into fresh food and groceries.

Wesfarmers boss, Richard Goyder, whose business includes Coles, Bunnings and Target, has famously warned that Amazon will "eat all our breakfasts, lunches, and dinners."

The announcement is being felt on the stock market by those who will feel the biggest brunt of Amazon's expansion.

JB Hi-Fi (ASX:JBH) is down 1.35 per cent this morning, as is Myer (ASX:MYR) and Harvey Norman (ASX:HVN).

Business News Australia
Author: David Simmons





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