Are you one of those really well prepared people? You know, someone who loves lists? Do you operate the household with a spreadsheet? Are you meticulous with your calendar? Do you have a list of everyone’s birthdays and important dates?
Are you one of those people who have already done the Christmas shopping?
If you are, then I’m sorry, I have some bad news for you.
You’ve jumped the gates too early. If you’re so well prepared you already have Christmas covered, you’re not going to like what’s coming next.
The problem with being too well prepared this year is you’ve not allowed for the Amazon effect.
That’s right, the world’s largest ecommerce company is all set and ready to hit the Aussie market in the lead up to Christmas.
When Amazon launches that’s going to mean…
Get ready for the biggest sales day of the year
Huge product ranges, massively discounted prices, bargains and sales galore. And that’s just on a normal trading day! Get ready to load up on Christmas gifts, because you’ll be an Amazon convert within minutes.
What you’ve also got to remember is that 24 November is one of Amazon’s biggest sales day of the year.
24 November kicks off ‘Black Friday’. For Amazon it’s a day when they make billions in revenues. In 2015 Amazon’s UK site alone sold more than 7.4 million items on Black Friday. This equated to over £1 billion in sales. Globally, they sold more than 54 million items.
Remember, that’s just on one sales day. And it’s not even their biggest. Amazon’s biggest sales day is ‘Prime Day’. That’s closely followed by ‘Cyber Monday’. ‘Black Friday’ comes in a distant third.
But it’s Black Friday that’s coming up next week. And it’s likely that Amazon Australia is going to launch in time to capitalise on the madness of Black Friday sales.
You heard correct. Amazon Australia could officially launch as early as next week.
And all indications are they will hit the ground running. That means ready to ship products all over the country with their fast and efficient supply chain.
Next day delivery? You bet. Same day delivery in metro areas? Most likely. One hour delivery in areas within reach of their distribution centres? We think so.
But for all the excitement and hoopla surrounding Amazon Australia’s launch, there’s something else you should know.
In fact there’s a big problem with all of this. One that we’re not sure Amazon has really thought too hard about. This problem is so big that if they don’t fix it, they might not even exist in Australia beyond 2018.
The good news is this problem is fixable. And there’s a small ASX-listed company that can help Amazon out of their troubles.
I’ve prepared a special briefing on Amazon’s problem and how one ASX small-cap can fix it for them. To read my special briefing just head here.
When they come the old guard will vanish
With Amazon’s imminent launch, the signs aren’t good for Aussie retail. Our view is that Amazon will change the Aussie retail market.
They’ve done it in every single market they land in. Why would Australia be any different? I don’t believe it will be.
We were back in Australia recently and had the pleasure of attending the Melbourne Cup. During the day we heard that Myer Holdings [ASX:MYR] had decided to extend their sponsorship agreement with the Victorian Racing Club for another five years.
We were somewhat surprised by the announcement. Surprised because we’re of the view the Myer probably won’t even exist in five years’ time. Our view is that they’re occupying dead space in the retail sector.
You see, Myer doesn’t have the ‘premium’ tag attached to it in the same way David Jones does. But it also isn’t ‘bargain’ enough to occupy the same space as Target or Kmart.
It also doesn’t have the online presence of ASOS or, as you’d expect, Amazon. Myer sits in this strange no man’s land of not here or there, but nowhere.
And we think that in absence of a complete overhaul, the company is only going to see tougher times. It’s no surprise that Myer’s stock is down 48% year to date already. We think that when Amazon hits, that downtrend will only continue.
But it’s not just Myer that’s in trouble. The retail ‘kings’ Harvey Norman [ASX:HVN] will see tough times too. They’re down over 26% year to date. And with Amazon getting ready to roll out products including electronics and computing, that’s going to challenge Harvey Norman’s retail ‘dominance’ too.
Is this a coincidence? We don’t think so
But the one that might find it tougher than all is Kogan.com Ltd [ASX:KGN]. Interestingly, Kogan’s stock price is up 169% year to date. But it’s down 25% from their highs of $4.90 just a month ago.
The Amazon effect in play? You bet. In fact, we think Kogan’s petrified of Amazon. That’s why founder and CEO Ruslan Kogan and Executive Director David Shafer have been offloading stock of late.
As reported by the Sydney Morning Herald,
‘It is understood that Kogan was responsible for the 3 million shares that traded before the market opened on Tuesday morning, at $4.25 each, and Shafer accounted for the 2.35 million shares that were sold at the same price – netting them more than $22 million. Again.’
The ‘again’ part is because Kogan offloaded $22 million worth in August. Now you have to question why a founder and key director are offloading millions in stock in the run up to the busiest period of the year for their company.
And is it any coincidence this is all before their biggest rival, Amazon, is set to hit Aussie shores? Well, we don’t think so. The true motivation for selling this stock only Kogan and Shafer know. But you have to wonder about the timing.
Amazon is going to shake Aussie retail to its core. Myer, Harvey Norman, JB Hi-Fi, Kogan — they’re all set for troubled times. Amazon will beat them on range, price, delivery and service.
We certainly wouldn’t want to hold any Aussie retail stocks right now. As Amazon lands, it could very well clear out the old guard. That’s danger for stockholders in those companies, but a huge win for the Aussie consumer.
Interesting times ahead — and we can’t wait to see it all unfold.
Editor, Australian Small-Cap Investigator