eBay’s bold Amazon warning
AUSTRALIAN retailers selling via Amazon Marketplace risk having the e-commerce giant rip-off their products for its private label range, the head of rival eBay has warned.
Speaking ahead of the imminent launch of Amazon's local operation, eBay Australia and New Zealand managing director Tim MacKinnon said competition was "great for the market and great for consumers, as long as the competition is fair".
"We let every retailer big and small compete," he said. "Where you get players that try to use the data they get and then decide to go and retail those items themselves, that's where it becomes a little unfair. We will be watching that carefully."
While eBay runs a pure marketplace, Amazon's mixed model means it can come into competition with its own sellers. "So whenever a seller sells [through Amazon Marketplace], they expose how much they sell," Mr MacKinnon said.
"The retailer can decide, 'Actually I'll make more money if I sell that directly myself,' and then they can make another decision, 'I'll make more money if I make it myself.' I would say to Australian businesses, that they should compare their experience they have today on eBay with others.
"Our goal with Australian businesses is to help them grow. We provide them account support, we provide 11 million unique visitors every month, we provide 160 million people globally if they're exporting.
"And we also don't compete with our retailers - we don't use their data and then decide to cut them out and go directly to their suppliers."
Mr MacKinnon said there had been "a lot of hype" about Amazon. "It will be interesting to see what they actually launch with, to see if they live up to the hype," he said.
"eBay has been in this market 18 years, three in five Australians have bought something on eBay in the last 12 months, 90 per cent of what we sell is new, we have 60 million listings located in Australia - that's what Australians expect."
Amazon's big selling point is expected to be its prices, which some analysts predict will be up to 30 per cent cheaper. Amazon is reportedly planning a "zero per cent margin" strategy for the first few months in order to quickly gain share.
"On price, when you have the selection of 80 of the top 100 retailers, 40,000 small and medium businesses, all trying to offer the best prices for consumers, you end up having the best prices," Mr MacKinnon said.
"eBay represents Australian retailers, so we're the one-stop shop for all the Black Friday sales, all the deals they're doing are featured on the site. All of those retailers are keen to match the prices Amazon will offer.
"We're so confident on that we are offering a best-price promotion on all of our more than 15,000 deals items. We're confident Australian retailers will seek to match [Amazon's] prices. We also run big sales - tomorrow we're going to do a site-wide coupon that will make the Black Friday deals even better."
Meanwhile, retail billionaire Gerry Harvey has said he will "wait and see" what Amazon's prices are like before deciding whether Harvey Norman will price-match. "I don't know yet," he said.
"If they're coming out and they're competitive prices we'll be price-matching, but if they come out and do bait advertising and predatory pricing, that's a different thing altogether, because that's not their everyday price.
"But of course if you do that then that's against the law. What are they regulators going to do if they start doing things like that? Zero per cent margin is predatory pricing. What they're trying to do here is force everyone else into bankruptcy, then when they send everyone broke, up go the prices."
Mr Harvey said he was "a bit flabbergasted" as to why Amazon would launch just before Christmas, when "most people don't want to buy online because they're scared" they won't receive the items in time.
"Amazon have got a big new warehouse, big new staff, they're all set to make some gigantic stuff-ups," he said. "It makes no sense. All they'll do is get themselves into trouble with a whole heap of people all complaining, 'I didn't get it.'
"If it was me I'd open in February or March. When the 14 of December comes, no one will buy [online]. It makes no sense."
Mr MacKinnon said he couldn't comment on Amazon's logistics capability, but said the most important thing to Australian customers was free shipping.
"Whenever we ask our customers was they value most in shipping, free shipping comes out on top," he said. "Eighty per cent of the items on eBay are free shipping. When it comes to speed, a quarter of our items ship in two days, and half ship in three days."
In a note on Thursday, investment bank UBS said the launch of Amazon would accelerate the uptake of online shopping in Australia, with a survey of more than 1000 consumers finding 42 per cent expecting to spend more as a result.
"By category, electronics, apparel/shoes and cosmetics were the products Australians were most interested in purchasing from Amazon with baby, auto and fresh of least interest," UBS analysts wrote. "Price, free delivery and range were highlighted as the three key drivers of using a local Amazon site."
Amazon has been contacted for comment.