Amazon rumoured to be eyeing Australia, but experts say there are still opportunities for local booksellers

It’s one of the largest, oldest and most successful online retailers in the world – and it might be coming to Australia.

Steven Noble, senior analyst at Forrester Research, says there are rumours going around that Amazon is looking at operating a domestic website in Australia, in addition to a planned data centre Down Under. It is already the largest overseas site for booksales in Australia.

“There is talk it is looking for a warehouse in western Sydney,” Noble told SmartCompany this morning.

“This is a strongly growing market and already a good one for Amazon,” adding a warehouse could help Amazon serve nearby markets such as New Zealand and Asia.

Daniel Jordon, chief executive of Collins Booksellers, says he wouldn’t be surprised if the industry talk – of the industry juggernaut setting up in the second half of the year – came true.

“Amazon is keenly felt as a major competitor so it’s always been a case of if rather than when,” Jordon says.

“It’s not ringing any alarm bells for us.”

Jon Page, President of Australian Booksellers Association and manager of Pages & Pages in Sydney’s Mosman, says he would welcome Amazon’s arrival but is doubtful it’s a fait accompli.

“Its arrival in Australia would be great news because it would start charging goods and services tax on purchases and be subject to the parallel importation rules,” Page says.

“So it doesn’t really make sense for the business decision if you are Amazon, but I’d welcome it because it would be more of a level playing field.”

The comments follow a report by Morgan Stanley saying that Australia, with its high gross domestic product per capita and highly concentrated east coast population, was potentially a strong market for Amazon.

“…given existing retail cost structures are high in Australia, this would provide further incentive for Amazon to set up operations,” the investment bank said.

“If Amazon were to set up operations in Australia this would provide stiff competition for nearly all other incumbent retailers.”

“Australians are already very familiar with Amazon, but operating a domestic website could further expand its reach in Australia.”

Questioned on the likely impact on book prices if Amazon set up here, Noble says there are many variables: whereas a local warehouse would cut shipping costs, this would be balanced by Australia’s expensive delivery charges.

And he says that although Amazon’s arrival would be significant, it shouldn’t necessarily strike fear among local booksellers.

“There are ample opportunities for Australian online retailers to continue to grow,” Noble says.

Nielsen BookScan says that book sales fell by 7.1% last year to 60.4 million, and the value of sales slumped by 12.6% to $1.1 billion.

Nielsen general manager Shaun Symonds said earlier this month the fall was partly driven by the collapse of REDgroup Retail, the owner of Angus & Robertson and Borders, which collapsed in February and had about one-fifth of the market.