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Amazon launch: pharmacy must brace itself

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AMAZON Australia has finally launched after months of speculation with free delivery on orders over $49 

Amazon, the world’s biggest online retailer has officially kicked off its local store offering massive discounts on millions of items across more than 20 categories, reports

“Focusing on customers and the long-term are key principles in Amazon’s approach to retailing,” Amazon Australia country manager Rocco Braeuniger said in a statement on today.

“By concentrating on providing a great shopping experience and by constantly innovating on behalf of customers, we hope to earn the trust and the custom of Australian shoppers in the years to come.”

Since 2013, Australian shoppers accessing the website have only been able to browse a selection of Kindle e-books and audiobooks. The rollout of the full Amazon offering — which excludes grocery delivery service AmazonFresh, for now — has had the local retail industry in a state of panic.

Amazon’s US website was already the second most visited retail website in the country, with 4.6 million Australian visitors in October compared with 6.7 million to Woolworths, according to online measurement firm Nielsen.

Analysts have estimated Amazon will undercut local prices by up to 30% leading to predictions of a pre-Christmas price war and accusations of “predatory pricing” from the likes of Harvey Norman boss Gerry Harvey.

But the chair of the competition watchdog, ACCC,  Rod Sims,has warned the it won’t save local retailers from Amazon, describing it as “good for consumers” and saying “in competitive market, there will be winners and losers”.

Amazon’s launch across 23 categories, includes personal care items, such as female and male grooming, sun and dental care (and sex toys) kitchen, music, office products, PC, shoes, software, sports and outdoors, tools and home improvement, toys, video games, watches and wireless.

Australian customers will also be able to purchase Amazon’s Fire TV streaming device for the first time, as well as sign up for Amazon Prime Video and Twitch Prime streaming services.

The Amazon Basics private label range, which includes everything from USB cables to puppy training pads and bath towels — will initially only be available across a range of consumer electronics products.

Amazon’s launch deals include Kindle e-readers starting from $109, Fire TV for $69, up to 30% off toys including Barbie, Batman and Disney Cars, up to 20% off Sunbeam kitchen appliances, 30% off Calvin Klein underwear and Tommy Hilfiger polos, and a month’s supply of Huggies nappies for $65.

“Over time, we will create thousands of new jobs and invest hundreds of millions of dollars in Australia,” said Mr Braeuniger. “The result will be an ever-improving customer experience driven by the regular introduction of new products and services that we hope customers will love.”

Amazon will offer free shipping on all purchases over $49, with speed ranging from three to seven business days in most major cities and regional areas, to between seven and 10 business days elsewhere.

Customers in Sydney, Melbourne, Brisbane, Adelaide and Canberra will be able to pay $9.99 for one-day priority delivery, while customers in Perth and other cities and regional areas of Victoria, NSW and SA will have to pay $11.99 for shipping within two business days.

All other areas will have to pay $19.99 for priority shipping within one to three business days. The slightly slower, “expedited” shipping option ranges in price from $5.99 to $9.99, and takes between two to seven business days.

Amazon, which has had a local presence with Amazon Web Services since 2012, now employs more than 1000 people. Earlier this year, Amazon confirmed it was setting up its first Australian fulfilment in Melbourne’s Dandenong South. The company recently purchased 2.11 hectares of land in Sydney’s southwest, with speculation it could be the location of a smaller NSW fulfilment centre.

CEO of Advantage Pharmacy, Steven Kastrinakis says pharmacy must brace itself for “massive disruption”.

“Amazon’s arrival in Australia has the potential to change Australian consumer behaviour by encouraging more online shopping.

With reports on Amazon’s success in obtaining pharmacy licenses in over 10 US states and its potential to tap into the prescription supply business, the pharmacy industry should brace itself against massive disruption.

“The 6th Community Pharmacy Agreement (6CPA) ends in June 2020, and in this short amount of time between now and then, many changes can occur and may affect the decisions of the Government in developing the next Community Pharmacy Agreement.

“The reforms should stay true to its purpose of supporting the National Medicines Policy by ensuring that radical disruptions to the industry will not affect the quality use of medicines, as well as ensuring the sustainability of the pharmacy industry in Australia.”

University of Chicago economist and Freakonomics author Steven Levitt, currently in the country to speak alongside Malcolm Gladwell at a series of seminars in Sydney and Melbourne, said the launch of Amazon was great news for Australian consumers.

“In the US, the combination of Amazon and Walmart, those two are incredibly efficient and brutal competitors, which as a consequence leads to very low prices combined with great service for customers, which makes customers go in droves,” he said.

“Consumers are greatly benefited by both the direct effect of those companies and the services they provide, but also the indirect effect, because it puts a lot of pressure on competitors to be better.

“Amazon is brutal. They’re good at what they do. If I were a business owner, I’d be trying to think about how to work with Amazon as opposed to trying to fight them.”

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