The head of the Australian Retailers Association has predicted that Amazon will face challenges as it moves into the Australian market, adding that the “cost of business that they talk about — this 30 per cent” might not be achievable.
Speaking earlier to My Business, executive director Russell Zimmerman said that even if Amazon did fail to materially disrupt the local market, the honeymoon period surrounding its launch may still have an adverse impact on Christmas trade for already weary businesses.
Mr Zimmerman’s comments come in anticipation of Amazon’s big launch, which happened, after much hype, on Tuesday, 5 December.
According to News Corp, the international retail giant “snuck” in under the cover of darkness overnight, after an initial failure to launch and plenty of speculation.
It said that Amazon was initially thought to have chosen Black Friday as its launch day, more than a week ago.
News Corp also said that the launch comes a day after it warned its Australian Marketplace sellers to “make sure everything is up to date” including pricing and shipping details to “take advantage of sales from day one”.
Meanwhile, earlier in the year, the Australian Small Business and Family Enterprise Ombudsman wrote to Amazon to ensure that the company complied with Australia’s unfair contract terms legislation.
At the time, Ombudsman Kate Carnell said that the pending arrival of Amazon Marketplace in Australia represented an opportunity for many small businesses to compete online and extend their reach.
But she also warned the company of its obligation to treat small businesses fairly in accordance with Australian law.
“Some businesses are concerned about the threat of competition while others are excited to embrace the opportunity that Amazon offers,” Ms Carnell said.
“For consumers, the Amazon Marketplace promises to expand choice and put downward pressure on prices.
“I’m interested to see how Australian small businesses can accelerate sales and broaden their customer base though the Amazon platform.”
An analysis of the Amazon Marketplace contract terms in the United States suggested that they would have to be changed in Australia to comply with federal legislation, Ms Carnell said.
The Ombudsman added: “From 12 November 2016, changes to the Australian Consumer Law protect small business from unfair terms in standard form contracts.
“A standard form contract is one that has been prepared by one party and where the other party has little or no opportunity to negotiate the terms.
“An unfair term is one that causes a significant imbalance in the parties’ rights and obligations and causes detriment to a small business if it were applied or relied upon.”
Ms Carnell said that in Amazon’s United States terms and conditions, the company reserves the right to refuse service, terminate accounts, terminate rights to use Amazon services, remove or edit content, or cancel orders at its sole discretion.
“This may be considered unfair as action can be taken by one party, Amazon, but not the other party, the vendor, to terminate the contract,” the Ombudsman said.
“I’ve requested that Amazon review the terms and conditions in use for standard form contracts in its Australian operations to ensure they comply with the unfair contracts terms legislation.”
A recent My Business poll suggested that two-thirds (65.6 per cent) of SMEs are expecting slower sales this Christmas compared with last year, and official data from the Australian Bureau of Statistics has shown retail growth rates stalling or even going backwards.