Amazon, a top stock recommendation, punts on bigger market share in Australia with Prime

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Australian Economy, Macro Economics

Fast and free delivery is what that matters when we talk about online shopping, and with the launch of Amazon Prime in Australia, Amazon which is amongst the top stock recommendations globally now aims to give a tougher competition to other players in Australia. Amazon Prime has a wide array of benefits – it has a streaming-video service, one that’s home to a library of movies and TV shows. Prime also lets you stream music to your phone, tablet or PC. Then you have unlimited cloud storage for the photos and 5GB of space for documents and videos. Amazon Prime, on the US site, is associated with the annual membership of $US119 (which is $160 a year) with free same day and one day delivery to major cities when spending over $US35.

The entry of Amazon into Australia comes on the back of the e-commerce segment’s growth in the country. The forecast for e-commerce sales in Australia depicts an average growth of about 9.1% per annum over medium term forecast period (from 2017 to 2021) while sales might touch USD24.2bn in 2021 from USD17.2bn in 2017. Further, Australia is now expected to take the lead over Singapore, Malaysia and Hong Kong within Asian zone, in terms of ecommerce market. Meanwhile, the launch of Prime in Australia came amid the stopping of Australians from shopping on Amazon’s international websites disappointing the consumers, which happened because of new goods and services tax rules on overseas online purchases.

The Amazon Prime members need no minimum purchase on Amazon’s domestic selection of eligible products. Amazon Prime members will also get access to streaming service Amazon Prime video, Amazon Prime Reading, gaming services and Alexa-enabled devices and the ability to shop via voice. The Amazon prime is thus predicted to reach 90 percent of Australians in just 2 business days as per the ecommerce experts.

It has been also claimed that the two day delivery model will be available in regional cities including Albury-Wodonga, Bendigo, Gold Coast, Gosford, Newcastle, Toowoomba and Wagga Wagga and also in main cities in Sydney, Melbourne, Brisbane, Perth, Adelaide, Hobart. However, shipping within four to five business days will be received by the remote location areas considering the delivery constraints. $11.99 is the price for one-to-two day delivery, on the other hand remote parts of the country would pay $19.99 for the same one-to-two day delivery. For standard i.e. less urgent deliveries, $5.99 price will be charged in the eastern capital, with other Australians paying more for this service for two to seven days’ delivery.

There are around 60m items currently on Amazon’s Australia website which is much less than Amazon stores including its US site, which has 500m products for sale, and tends to charge higher prices. For Amazon, the so called ‘blue chip company under top stock recommendations,’ Australia is the 17th market in relation to Amazon Prime.

This move is challenging  the position of other giants like eBay or Kogan.com in the Australian market and particularly poses a threat to the crown holder eBay in the online retail space which is also losing space with its monthly traffic down by 0.3 percent year on year, representing 9.5 percentage points of growth despite the launch of a range of services by eBay.


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