Amazon has reversed its decision to block Australian shoppers from Amazon.com, saying it has listened to customer feedback and worked out a way to comply with Australia’s GST rules for low value goods bought online.
But retail experts argue the move was designed to kick start growth for Amazon’s local operations, which went live in Australia almost 12 months ago.
“In retrospect it is clear that Amazon used the GST change to force-kickstart Amazon.com.au,” says Juozas Kaziukėnas, founder of Marketplace Pulse which monitors the performance of global ecommerce marketplaces.
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Introduced July 1, the new tax rules meant global online marketplaces operating in Australia had to start collecting 10 per cent tax on overseas purchases under $1000. In response the Seattle company announced in May that Australian shoppers would no longer be able to have items delivered from its international sites, re-directing them to much less established Amazon.com.au.
“As a result of customer feedback, from 22 November Amazon customers will be able to ship eligible items from Amazon.com to Australian delivery addresses,” Amazon said in a statement today.
The decision coincides with the launch of Black Friday, a massive US sale day that’s making inroads here in Australia.
GST will now be applied to international products from Amazon’s own retail offering, ie the products Amazon ships and sells itself. Having its global third party marketplace sellers collect GST is still a challenge for Amazon, so those products are still blocked from purchase.
“Earlier this year, Amazon assessed changes to the Australian GST law as a global company with multiple international stores and, in order to remain compliant with the legislation, made the difficult decision to suspend exports from our international stores to Australia,” the statement reads.
“Following the announcement of these changes, we listened to the customer feedback and assessed how we could respond. Since that time, our teams have continued to focus their efforts on building the complex infrastructure needed to enable exports of low value goods to Australia and remain compliant with GST laws.”
Amazon declined to share how it overcame the challenge between May and November.
Breaking old habits
Kaziukėnas believes the move was an attempt to break old habits by sending Australian shoppers to the domestic site rather than the international stores they frequented prior to Amazon’s Australian launch in December 2017.
“In June it launched the Prime membership in Australia. By forcing Australian customers to Amazon.com.au instead of Amazon.com — which they previously used — Amazon made sure it takes off on day one. Now that it has achieved some critical mass they are able to remove the redirect and allow purchasing on Amazon.com too, but the Australian marketplace has been fueled.”
“Unfortunately we can’t estimate how many Australians joined Prime or the sales on Amazon.com.au.”
While Amazon pockets the money either way if a sale comes via the Australian or the US sites, the local site needs to attract more sellers, buyers and inventory so it is able to service Australian shoppers more efficiently, driving down prices, offering faster shipping and making Prime a more compelling option.
“The Australian site continues to mature, has close to 100 million products now, and more competition through a growing marketplace, so prices are coming down too,” Kaziukėnas said.
Ninety per cent of Australian retailers say Amazon hasn’t affected their business since its local launch, according to a survey conducted by Deloitte. And 83 per cent don’t think Amazon will have any impact on their Christmas trading performance.
Throughout the year retail analysts have cautioned that Amazon in Australia will be a slow burn, and retailers shouldn’t become complacent.
David White, national leader of Deloitte’s Retail, Wholesale & Distribution Group, said we yet to see the full force of Amazon locally but this Christmas will paint a clearer picture of the progress Amazon has made.