Are you tired of hearing about Amazon.com [NASDAQ:AMZN] yet?
Well, take a deep breath. The story isn’t going away.
Although the US$544 billion (AU$714 billion) online retailer won’t spell the end of bricks and mortar retail in Australia, it’s sure to be a game-changer. And the countdown to launch is likely down to a matter of days.
Country manager Rocco Braeuniger addressed potential suppliers at a conference in Sydney on Monday. Speaking of the company’s Aussie launch, he said, ‘Let me tell you we are getting really, really, really close.’
Not terribly specific. Though three ‘reallys’ is revealing.
We don’t have any inside scoop here. But the rumour mill still has it that the launch will come within the next nine days. That would see Amazon enter the market just in time for the consumer shopping sprees on Black Friday and Cyber Monday — 24 and 27 November.
And Amazon aims to come in swinging.
As reported by The Australian Financial Review:
‘Amazon has confirmed the fears of Australian retailers by claiming it is willing to sacrifice short-term returns to ensure long-term success as it prepares to invest $700 million in Australia over the next five years…
‘It is understood Amazon is initially aiming for two-day deliveries until it can open fulfilment centres in other states and a series of small despatch centres to facilitate the launch of Prime.’
Amazon has long been about sacrificing short-term returns for long-term success. It’s why the company’s profit margins remain razor thin, despite massive annual turnover. And why the stock trades on a price-to-earnings (PE) ratio of 285 times.
Nosebleed PE ratio aside, two things are worth noting.
First, Amazon plans to spend US$700 million setting up shop here.
Second, they’re still fine-tuning their delivery process. And if you know anything about Amazon, you’ll know it’s all about cheap, fast and reliable delivery.
Clearly the company has its work cut out for it to succeed in Australia. And it’s going to need some local companies to partner up with. The big question is: Which companies are most likely to get a slice of that US$700 million?
Answer that question correctly and you could make yourself a tidy profit.