Australian Newsagency Blog

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How could the Amazon decision to block overseas sales to Australia play out?

Mark Fletcher
June 8th, 2018 · 1 Comment

Amazon recently announced they plan to block the sales of goods from its overseas sites to Australian shoppers because of new GST rules that apply from July 1, 2018, to items purchased overseas.

I think this issue will take time to play out. I say this based on Amazon being essentially a landlord for many businesses on its Marketplace platform. Those suppliers stand to miss out the most in that Amazon itself is already locating in its new Australian warehouse the items it is likely to ship from its own inventory.

Amazon Marketplace acts as a landlord with supplier pricing similarly structured to what we see from shopping centre landlords. There is a cost to place products on then platform and layers of other costs depending on services you leverage. However, it offers even more services.

For example, an Amazon Marketplace supplier can provide Amazon products for fulfilment by Amazon from Amazon warehouses.

The Amazon announcement that they will block purchases from overseas could result in overseas located Amazon Marketplace suppliers moving inventory to Australia for local fulfilment. That would be a win for Amazon as local fulfilment is a fee for service offer.

I expect that plenty of Amazon Marketplace suppliers are agitating Amazon re their announcement. If sufficient do complain, the company could address its apparent tech barrier to collecting the GST imposed by the Australian government. If these suppliers do not want to locate product at the Australian Amazon warehouse and if the business is important enough to them they will find another solution. If that solution cuts revenue Amazon wants, it will find a way to solve the problem.

Regardless, what actually happens will be driven by Australian consumer demand. The higher demand for a product the more likely it will be purchased by Australians through Amazon.

Amazon is a pragmatic, commercially driven, business. While their announcement last week was at first glance a shock, I can see ways this plays out well for the company, possibly helping it make more money without Australian consumers missing out on anything.

What does this have to do with newsagents? Plenty. This whole topic is at the heart of business discussions among large and small retailers today given the important of online in the retail mix. If the discussion feels foreign to you, there is much to learn about online and how it is impacting event consumer facing business around the world.

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Category: retail

1 response so far ↓

  • 1 Mark Fletcher // Nov 22, 2018 at 10:31 AM

    Amazon has announced they will now ship from the US to Australia, showing the shrill of some politicians was premature, again.

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