In this file:
· Amazon launches $100 billion grocery market and undercuts Woolworths and Coles by 50 per cent
· Amazon.com awakens and is hacking into profits at Woolworths Group Ltd and Coles Group Ltd
Amazon launches $100 billion grocery market and undercuts Woolworths and Coles by 50 per cent
Amazon Australia is selling groceries 50 per cent cheaper than other markets
Products such as toothpaste, nappy wipes and laundry powder are half price
Supermarkets have questioned the relationship between Amazon and suppliers
By Paula Ahillon For Daily Mail Australia
29 November 2018
Amazon has joined Australia's multi-billion dollar food and grocery market and is selling products 50 per cent cheaper than Woolworths and Coles.
The e-commerce giant is selling a number of household staples at half the price Woolworths and Coles are selling them for.
Amazon is also offering slashed prices on brands such as Huggies, Omo and Finish.
Currently, Colgate Total toothpaste costs $3.50 on Amazon.com.au but is $7 at Coles and Woolworths.
Huggies nappy wipes cost about $3.99 on Amazon in comparison to $6 at both supermarkets.
Omo laundry powder is $22 compared to $30 and Finish dishwasher tablets are costing $16.99 versus $35.
Amazon, which makes up less than one per cent of the online food and grocery market, grew nearly 40 per cent over the last 12 months.
Woolworths has questioned if Amazon is selling products below cost or whether Australian suppliers are giving them better deals, reports The Australian Financial Review.
Woolworths has made plans to ask suppliers to clarify how their deals work with Amazon early next year.
Suppliers who favour Amazon risk being replaced by rival and private brands if their products underperform in sales in Woolworths stores...
Amazon.com awakens and is hacking into profits at Woolworths Group Ltd and Coles Group Ltd
Brendon Lau, The Motley Fool
November 30, 2018
Investors beware! Amazon.com’s presence is finally being felt on the local market with a news report claiming that the US shopping giant is undercutting prices on a range of goods sold at supermarket chains Woolworths Group Ltd (ASX: WOW) and Coles Group Ltd (ASX: COL).
The Woolworths share price fell 1.5% to $29.39 in morning trade while Coles share price tumbled 2.1% to $12.13 – its lowest level since its listing last week.
The Metcash Limited (ASX: MTS) share price is also wallowing in red ink as it fell 1.1% to $2.81 as the S&P/ASX 200 (Index:^AXJO) (ASX:XJO) index shed 0.7% at the time of writing.
Our retailers have not noticed any impact from the launch of Amazon’s Australian service a year ago but that is quickly changing after the Australian Financial Review reported sources in Woolworths complaining that some local suppliers may be giving Amazon better pricing than to our largest supermarket chain.
The giant awakens?
The local Amazon site is selling some popular non-food pantry items at up to half the price of the identical item sold at Woolies or Coles. These include Colgate Total toothpaste, Huggies wet wipes, Kellogg’s Rice Bubbles and Finish dishwasher tablets – just to name a few.
Some of these items are sold at below what Woolworths and Coles buys them at and this is prompting some to question if Amazon is getting preferential treatment.
The irony is that Woolworths and Coles used to be the bullies in the industry and had made life very difficult for suppliers. Amazon has turned the tables and now both our supermarkets seem to be playing the victim card.
However, it’s not necessarily the case that Amazon is getting cheaper prices from suppliers. The online giant may be willing to sell some items at a loss to win market share.
It’s not like this is an uncommon strategy used by established retailers to draw consumers into their stores. The industry even has a term for such products – they are called “loss leaders”.
Another explanation is that Amazon may be using parallel imports, although this can’t explain the pricing differences for locally made products.
Foolish takeaway ...