Amazon.com, Inc. (NASDAQ:AMZN) Expected To Undercut As It Prepares Australian Launch

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It will be perfectly legal for online retail giant Amazon.com, Inc. (NASDAQ:AMZN) to engage in price undercutting to the detriment of local businesses in Australia as the competition laws allow it. This was revealed by the competition regulator in Australia as the online retail giant gears to launch down under. According to the chairman of the Australian Competition and Consumer Commission, Rod Sims, the law allows Amazon to sell items at loss-making prices in order to lure customers.

Amazon has not revealed when it will launch in Australia but a distribution warehouse measuring 24,000 square feet has been under construction in Melbourne. The Seattle, Washington-based online retail giant has also posted job advertisements in both Sydney and Melbourne since August this year. Amazon’s country manager in Australia, Rocco Braeuniger, is expected to meet with over 500 local suppliers in Sydney soon.

Black Friday

Sources indicate that Amazon is likely to launch in Australia in late November in order to take advantage of the Cyber Monday and Black Friday shopping sprees when prices are usually dramatically reduced. According to Craig Woolford, a retail analyst at Citi, the launch of Amazon in Australia is likely to lead to a disruption of retailer pricing architecture and consequently lead to an increase of investments in areas such as logistics.

More than in any other country, shoppers in Australia have embraced the ‘click and collect’ concept which involves making purchases online and then collecting at a physical location such as a store or a designated locker.

“Online delivery has its challenges but Australian have adapted the most in the world to click and collect and most retailers are also embracing the concept,” said Woolford.

Flexible locations

According to research conducted by MeeMeep, Blackbay and The Delivery Experience, about 48% of shoppers collect their purchases from flexible locations since they are not usually at home at the time when the parcel could have been delivered to them. Some mall landlords such as Stockland and Scentre Group have introduced lockers which can be used by online shoppers.

On Friday shares of Amazon rose by 1.59% to close the day at $1,111.60.

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