Borders entered the Australian market in 2002; the market responded by pushing the bookseller’s Australian division into bankruptcy. Starbucks tried to break into the country’s vibrant café culture, only to experience weak sales and pull out a short time later. As these examples indicate, past experience has shown that Australians remain fiercely loyal to local merchants and independent sellers, so it can be difficult for big retailers to break into the country’s well-loved ecosystem of independent sellers and local commerce.
For these and other reasons, Amazon has thus far avoided the Australian market. But that is all set to change in the coming year: Amazon recently announced its planned expansion into Australia. In a move celebrated by some and scorned by others, Australians and economists are watching the latest move by Amazon with both caution and interest.
In addition to the challenges created by Australia’s fierce loyalty to independent sellers, Amazon also faces some serious logistic concerns if it intends to succeed in Australia. The country’s 24 million people are spread across the continent, with small population centers all along the country’s coasts. Distribution costs are expected to be higher than in the United States, and some of the company’s most loved conveniences (e.g., two-day shipping) may be difficult to deliver efficiently in Australia. Regardless of these barriers, Amazon sees potential in the still-untapped market, and it is hoping to wedge itself into a position of success by returning to its roots and focusing on the sale of books.
That is, Amazon today is known for carrying everything, but it started out as primarily a book seller, and Australians are avid readers. They buy more books per capita than Americans and also spend more time reading. In the publishing world, Amazon still carries tremendous clout. The company can negotiate with publishers for special discounts, and it also receives faster delivery of stock for big releases. These benefits have left many independent bookstores in Australia worried that they will not be able to compete. Australian authors and scholars also express some concerns about the impact that Amazon will have on the country’s literary appetite. Currently, the “buy local” culture encourages independent bookstores to partner with Australian authors. Most stores have dedicated Australian sections and host frequent readings to help promote the work. But Amazon’s online culture will not provide authors the same level of support and promotion, which may result in fewer works by Australian authors being published.
Although many observers remain optimistic that Amazon, just like the other big box retailers that came before it, will be rejected by the Australian public, others worry that the powerful company’s entrance into the Australian market will be the end of the nation’s unique economic culture.
Discussion Question:
- Do you believe Amazon will be successful in Australia? Why or why not?
Source: Damien Cave, “Australia’s Amazon Book Battle,” The New York Times, October 19, 2017