Could Australia be better off without Amazon?

Will O'Loughlin:

Question one Paul from Victoria. Hi, team. According to Alan Kohler, Amazon is having a deflationary effect in America. Assumedly, that is replicated in other countries where Amazon is successful. On balance, would Australia not be better off without Amazon? Impacts on jobs inflation is already low, et cetera. Does anyone know why we allow them ready access to our country? Thanks and best regards.

 

Shannon Rivkin:

We'll probably both have a few views. Look, one thing I'll say for what Alan Kohler has said, what's going on in America with Amazon, probably that, and I haven't checked to see whether that's true or not but my guess is, he’s spot on but the massive difference between what's going on in Australia, I'm sorry, in America to everywhere else is the level of e-commerce that makes up part of their economy. In comparison, Australia, while steadily increasing, is incredibly low compared to the U.S. I've read something that Amazon has over 50% of online retail purchases in the U.S. which is absolutely huge especially considering so many people do a lot of their shopping online. I think Australia still is like five or 6% of retail sales are online. Relatively speaking, this can be very low and as well, I've now seen Amazon make that Whole foods acquisition in the U.S. which means they're going to have a bricks and mortar presence, again, probably more a concern for the deflationary effect it might have over there.

 

 

In Australia, it's going to be a very different situation. As I said, first, the Australians generally are very low online shoppers. Secondly, there's just no real opportunity for Amazon to make a real big step in as far as bricks and mortar and that is where the majority of Australians do and I think will continue to do at least in comparison to the U.S. with their shopping. I think that yes, it's going to have an effect. It's going to be very small in comparison to the U.S. and as far as I'm concerned, the benefits far outweigh the negatives. Increased competition, yeah, it's going to bring down prices. The supermarkets, for example, I consider Woolworths and Coles some of the most disappointing, I think, when you consider retail giants in the world. You go to the U.S. or Europe and some of the competitors there just have a far better product offering. If Amazon sees them lift their game, I say that is only a good thing.

 

 

Additionally, I should say that impact on jobs should only be, again, be a positive because Amazon's going to be a huge local employer here. They're already hiring. They're already finding space for warehouses and it's not like they're going to be shipping from overseas. They're going to be shipping from warehouses in Australia and so overall, I don't really see the big negative. Personally, I'm very excited for it.

 

Will O'Loughlin:

Yeah. I think Shannon said a lot of what I would have said. The only other thing I wanted to bring up was an example thinking about Uber and the entry of Uber into the market. It's brought down the cost of taxi fares and in my opinion, it's a better service than you get wit taxis. Although, yes, it's disruptive to the taxi industry, it's a win for all consumers. We're getting a better product at a better price. I view Amazon in the same way. If they can achieve a similar thing, then, it's great for everyone.

 

Shannon Rivkin:

Yeah and I’ll just say Airbnb as well for me. This is just an impetus for the hotel industry to start to improve their game. Tech disruption, I think, is fantastic and in Amazon's case, I think it's probably going to have a better effect than any way.

 

Will O'Loughlin:

Yep.

 

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