Why Amazon Fresh will face obstacles if it launches in Australia next year

Amazon’s Book Depository expands Australian titles and begins shipping from Melbourne

Amazon could reportedly expand its food delivery service into Australia as soon as next year, however, one local retail expert believes the US retail giant will encounter similar obstacles to those facing domestic retailers.

Amazon hired a software engineer in 2014 to help develop systems to power the Amazon Fresh service across Australia and according to Fairfax this week, a local launch could happen as soon as next year.

The US retailer’s grocery service, known as Amazon Fresh, is a fresh and frozen food delivery service similar to ones already offered by local supermarkets Coles and Woolworths.

This follows a warning from Wesfarmers boss Richard Goyder, who told the Retail Leaders forum in March that Amazon will “eat all our breakfasts, lunches and dinners,”

“We’ve got big competition online and through a physical presence, we are in a disruptive, disrupted world,” Goyder told the forum.

Amazon Fresh has been operating in the US since 2007 and expanded to the UK this year for Amazon Prime customers in east and central London.

The challenges facing Amazon

Gary Mortimer, a retail expert and a lecturer at Queensland’s University of Technology, told SmartCompany Amazon Fresh will have to overcome some challenges to be successful in Australia.

“In Australia we’re a long way behind, less than two percent of Coles and Woolworths’ sales are online,” Mortimer says.

“Compared to the US and the UK, we’ve got a lot smaller population, and we have challenges associated with geographic distance because our population is so dispersed.”

However, Mortimer says given Amazon’s business model is well-established, Australians will likely not hesitate to get on board.

“The benefits of Amazon’s service is that it can take products from many incumbent retailers, they can even source from delicatessens,” Mortimer says.

“The service has access to over 500,000 product lines in the US, which is significantly more than the 22,000 you would find in a supermarket.”

While Australia has to date seen a slow uptake of online grocery delivery services, Mortimer says that shouldn’t affect uptake should Amazon launch a local grocery delivery service.

“Amazon has great brand recognition, and the Amazon name is certainly of benefit, it conjures perceptions of trust,” he says.

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T.J . Antipodes
T.J . Antipodes
4 years ago

Good for small businesses to be found, too bad it has to be foreign company to come in and set it up and take profits offshore we can ill afford.

Most Australians dont even realise why Ebay has made change. is “quicksales’ . Yet it’s hard to sell on quicksales, because not enough Australians use their own online auction system.

Quicksales got a rise a few years ago when Ebay tried to make everyone pay by Paypal. Plus quicksales has allowed free listing for years, Which Ebay has followed to some degree. But more of us need to use them. My goods on Ebay would be a few dollars more each to sell on Ebay, than qucklsales.

Our big companies had a free run for years but did they expand in Asia or elsewhere, the answer is NO.

Now they will be undermined here, and less will be Australian owned.

Our big retailers have been lazy. Even the Bunning and Officeworks websites are wanting, I am always after more information. I am time poor and only want to go to a store when I can go and pick up and takeaway what I want. Go to a Woolworth’s and Coles website and there is not info.

If you want online to succeed then these people have to make sites with more information.