Australian retailers brace for arrival of Amazon

A web page featuring Amazon.com Inc's Australian URL is pictured in this photo illustration in a Sydney office yesterday. REUTERS

SYDNEY/San Francisco: Global e-commerce juggernaut Amazon.com Inc said yesterday that it would open its online shopfront service in Australia, ending rumours about its plans and increasing the pressure on the domestic retail sector to catch up with the digital economy.

The announcement fires the starting gun on a new era of competition between bricks-and-mortar and online retail in the world's 12th-largest economy, where 80% of the population live in cities and more than 90% have home internet.

Shares of electronics and appliances retailer Harvey Norman Holdings Ltd and department store chain Myer Holdings Ltd slumped 3%, while electronics merchant JB Hi-Fi Ltd lost more than 1% in a flat overall market.

"The pie's not really growing, so the natural conclusion is that the players in that market will have their market share reduced," said Danial Moradi, an equity strategist at Lonsec Research.

Investors seemed to be taken by surprise by the timing of the announcement even though Australian retailers and consumers have long anticipated the arrival of the world's biggest seller of goods.

The speculation grew in recent months when Amazon posted more than 100 advertisements for jobs in Australia, and it has registered hundreds of trademarks in the country.

The Seattle-based firm finally declared its hand by saying that, after offering its internet cloud service in Australia in 2012 and an online e-book store in 2013, "the next step is to bring a retail offering to Australia".

"We are excited to bring thousands of new jobs to Australia, millions of dollars in additional investment, and to empower small Australian businesses through Amazon Marketplace," the company said in a statement, referring to its online shopfront.

Daniel Mueller, an analyst at Forager Funds Management, said Australia was "ripe for picking" by Amazon because its retailers had lagged their global peers online.

About 7% of Australian purchases were online, while the rate in the United States, Britain and Germany was over 10%, he said.

The Australian operation would be the US giant's fourth Amazon Marketplace in Asia after China, Japan and India and its 12th globally. It has three Amazon Marketplaces in the United States and five in Europe.

In a separate development, Amazon chief technology officer Werner Vogels said in an interview on Wednesday that the company would roll out the technology powering Alexa, its voice assistant that competes with Apple Inc's Siri, to developers so they can build chat features into their own apps.

The service, Amazon Lex, was in a preview phase since late 2016.

The move underscores how Amazon is racing to be the top player in voice-controlled computing, after losing out in mobile to Apple and Alphabet Inc's Google.

Vogels said that Amazon's headway in processing how humans write and speak would make conversational assistants or "chatbots" more helpful than the clunky tools they've been in the past.

"There's massive acceleration happening here," he said before speaking at Amazon's cloud-computing summit in San Francisco.

"The cool thing about having this running as a service in the cloud instead of in your own data centre or on your own desktop is that we can make Lex better continuously by the millions of customers that are using it."

Processing vast quantities of data is key to artificial intelligence, which lets voice assistants decode speech. Amazon will take the text and recordings people send to apps to train Lex -- as well as Alexa -- to understand more queries.

That could help Amazon catch up in data collection. As popular as Amazon's Alexa-powered devices are, such as Echo speakers, the company has sold an estimated 10 million or more. Apple has sold hundreds of millions of iPhones and other devices with Siri.

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