We Are Going to Destroy Aussie Retail

Be warned. Be afraid. Get ready. The biggest disruption to Australia is on its way. Most people know about it. Most people know how it will change everything. But most people aren’t prepared for the tsunami that’s coming.

If you work in retail, your world is about to get turned on its head. If you own a retail business, then you’ve had fair warning. If you are a big retail player like Myer or David Jones, you’d want to think about cashing up and getting out now.

Soon, the likes of Target, Myer, David Jones, Kmart, JB Hi-Fi, Harvey Norman, Coles, Woolworths and even Aldi are about to get a swift kick up the pants.

Let me make this clear. What’s coming is going to change the fabric of corporate Australia. Some of the biggest names in Aussie retail have their heads on the chopping block. The executioner is coming and, in one swift, fatal blow, it will lop off the heads of incumbent Aussie retailers.

This executioner had already made its impact in the US, UK and Europe. Now it’s headed for Aussie shores.

This executioner goes by the name Amazon.

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The most dominant company in the world

Amazon is an exceptional company. Most people in Australia, however, have limited experience with it. If you jump onto Amazon.com.au, you will find a selection of books and Kindle books.

That’s it. That’s the extent of Amazon’s presence here in Australia…for now.

However, when I’m back in the UK, things are a little different. When I go to Amazon.co.uk, my selection is a little broader.

The list of ‘departments’ I can shop from includes:

  • Books
  • Electronics and computers
  • Home, garden, pets and DIY
  • Clothes, shoes and jewellery
  • Sports and outdoors
  • Cars and motorbikes
  • Fresh

There are more — so many more. That’s just a sample. Now, you’d recognise most of those things. But you might be wondering what the category ‘Fresh’ is.

Fresh is (as the name suggests) fresh food — groceries. Amazon is now a supermarket. It’s encroaching the space of traditional bricks-and-mortar supermarkets.

Where Amazon has completely changed the face of retail shopping, it’s now having the same impact on the supermarket industry. A few months ago, I asked: will Metcash [ASX:MTS] exist in four years’ time?

Based on my experience and understanding of the tech world, I would say probably not. At the time, I was of the view that Amazon — with its Amazon Fresh service — will swoop in (eventually) and dominate the Aussie grocery market.

While all the focus is on the health of companies like Metcash, Woolworths, Coles and the growing dominance of Aldi, everyone has missed the real threat: Amazon.

Don’t underestimate the importance of the Aussie market for Amazon. Just because it isn’t here yet doesn’t mean it doesn’t want to be. Australia poses a unique challenge to Amazon’s business model.

One of the most important aspects of Amazon’s service is fast, efficient delivery of goods. If it takes four to five working days, it’s simply inefficient. You may as well pop to the shops. But if Amazon can deliver anything to your door in a day or less, they become relevant. If they can deliver groceries to your door the same day, why would you bother going to the supermarket?

But Australia is a logistical nightmare for that kind of service. So before Amazon really hits Aussie shores, it wants to make sure it gets it right. Get it wrong, and it’ll never dominate the Aussie market.

Give me time and I’m yours forever

Living in the UK, I see firsthand the benefits of Amazon. Just recently, a pop-up window in my Amazon account let me know I ‘Saved £200 in delivery fees and 50 trips to the shops.’

While the £200 saving is nice, it’s the 50 trips that really impressed me. You see, Amazon’s been able to give me something that no bricks-and-mortar retailer ever could. Amazon has given me time. The time saved going to a shop, dealing with useless shop assistants, trying to find something that’s out of stock anyway.

That’s extra time I got to spend with my wife. Or time to get in that little bit of extra research for Australian Small Cap Investigator or Revolutionary Tech Investor. Or just time to relax and unwind.

That’s the power of companies like Amazon — they’re more than just ecommerce platforms. In fact, Amazon is more than just ecommerce. It’s the world’s largest provider of cloud services too.

It’s also pushing harder into streaming content. It’s taking on Netflix head to head — and both companies are looking to dominate existing TV networks.

And just when you thought that was it, Amazon is also a first mover in the smart home space. Its Amazon Echo (and ‘artificial intelligence’ system, Alexa) is one of the most innovative pieces of tech I’ve ever come across.

What it all adds up to is Amazon getting ready to bring its dominance to the Aussie market. Speaking to The Australian Financial Review yesterday, Justin Braitling, Chief Investment Officer of Watermark Funds Management, said,

‘[Amazon] will be dropping distribution centres and performance centres in every state next year.

They will be doing general merchandise and they will be doing fresh as well.

We spoke to the guy rolling out Amazon’s business here in Australia and in his words: “We are going to destroy the retail environment in Australia”.

If Braitling’s source is accurate (and I think he is), Australian retailers are in trouble. They aren’t prepared for an Amazon onslaught. They should be, because it will change everything. And perhaps the best investment move in all of this is to short every single Aussie retail company.

Amazon’s coming and it’s going to take over Australia.

Regards,

Sam Volkering,
Editor, Money Morning

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Sam Volkering is an Editor for Money Morning and is small-cap, cryptocurrency and technology expert.

He’s not interested in boring blue chip stocks. He’s after explosive investments; companies whose shares trade for cents on the dollar, cryptocurrencies that can deliver life-changing returns. He looks for the ‘edge of the bell curve’ opportunities that are often shunned by those in the financial services industry.

If you’d like to learn about the specific investments Sam is recommending in either small-cap stocks or cryptocurrencies, take a 30-day trial of his small-cap investment advisory Australian Small-Cap Investigator here, or a 30-day trial of his industry leading cryptocurrency service, Sam Volkering’s Secret Crypto Network here.

But that’s not where Sam’s talents end. Sam specialises in finding new, cutting edge tech and translating that research into how the future will look — and where the opportunities lie. It’s his job to trawl the world to find, analyse, research and recommend investments in the world’s most revolutionary companies.

He recommends the best ones he finds in his premium investment service, Revolutionary Tech Investor. Sam goes to the lengths of the globe and works 24/7 to get these opportunities to you before the mainstream catches on. Click here to take a 30-day no-obligation trial of Revolutionary Tech Investor today.

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3 responses to “We Are Going to Destroy Aussie Retail

  1. What a good write. I live in Australia and have so wanted a Amazon store here for years, Its an Amazing place to shop on line, I Have been doing all my christmas shopping online for years, shopping from the US. This year is the first time that i havent been able because of the shipping and dollar exchange.. But the saving and service is so much better , Bring on the store i say… cant wait for it, my blood runs to boiling when i think about it opening its online store……

  2. There is nothing new to see here, Australia is well known as the land of the rip off.
    Many people buy from Amazon US and have it shipped over and it still turns out cheaper than retail.
    I’ll give you one example of the ridiculous mark up prices we face especially in computer parts.
    https://www.amazon.com/Samsung-960-PRO-Internal-MZ-V6P1T0BW/dp/B01LYRCIPG/ref=sr_1_2?s=pc&ie=UTF8&qid=1478301823&sr=1-2&keywords=samsung+960+pro
    $830 shipped
    Yet retail here it is $1239
    https://www.ramcity.com.au/buy/samsung-960-pro-1tb-nvme-m.2-pcie-3.0-x4-80mm-ssd/MZ-V6P1T0BW
    2tb model is even more ridiculous at AU$2470 yet it is US$1300 from Samsung online which is around AU$1700 converted, So why is there a $AU700 mark up? Absolute joke, This is just one example of only one pc component!
    Let me give you another, Sony receiver
    Sony 7.2 Channel Hi-Res Wi-Fi Network 4K AV Receiver (STRDN1070 US$598(AU$780) here at our cheapest store JB HiFi it sells for $1399 even when it is on a once a year sale it has not been under $850.
    Don’t even get me started on software, Where there is no physical copy shipped, Just a digital code for you to download the software once you purchase it, Yet why are we paying a lot more than our US friends if there is no shipping or physical disc/s.

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