SYDNEY (Reuters) – Australian home entertainment installer Paul Boon has been relying on Amazon.com's ( AMZN.O ) US website for cheap wall mounts and other parts to keep costs down hold.
FILE PHOTO: Amazon's Australian URL web page is featured in this photo illustration on April 20, 201
But Amazon's recent move to keep Australians from shopping on their foreign websites, due to a new law requiring it to raise taxes, is once turned down by a loyal customer like Boon.
Considering switching to eBay Inc ( EBAY.O ), he adds that wall mount prices on Amazon Australia's website are 40 percent higher if they were to appear there at all.
"I'm going somewhere else to get that normal stuff," Boon said over the phone from the northern city of Brisbane, where he runs his business.
Amazon's launch of an Australian website in December, followed by the introduction of Prime Service last month for faster delivery, was heralded as a turning point for the country's retail industry. But it has come to a choppy start.
For customers like Boon, the retail giant has lost years of goodwill by forcing shoppers to a local location with a product range of about a ninth of the US site and selling some goods at higher prices.
It has also given eBay's online marketplace, its largest and more established rival in Australia, the opportunity to capture and capture that goodwill, build its first automated tax collection and payment system, and promote local customers with discounts.
Australia is the first market where Amazon, the world's second-largest company worth $ 890 billion, is responding to online sales tax by excluding customers based on their location.
An Amazon spokesman said in an email that the company would continue to expand its supply of goods and services through its Australian site and that "since the launch of Amazon Prime," it has been thrilled with the response of Australian customers.
The Australian Government has extended its 10% GST to all goods purchased online from July 1 via the UK. So far, it was only applicable to overseas purchases over $ 1,000 ($ 745).
Amazon has told the Australians just one month earlier that they will be expelled from its global network – the sale will be discontinued when an Australian delivery address is entered – although the government's plans were announced a year ago.
Critics say the decision is an excuse to channel traffic to the new local site and promote the Amazon Prime service.
"I'm sure Amazon will succeed in time, but I do not think this strategy will catapult them to success," said Ryan Murtagh, CEO of Neto, a provider of data and logistics support for about 3,000 online retailers in Australia.
"I think, in fact, it could do them harm long term."
Amazon has around 550 million products on its US site, including those sold by Amazon and third-party vendors, according to Boomerang Commerce, an artificial intelligence technology company in California. Compared to the 500 to 600 million third-party offers on eBay, which contains duplicate products.
Ebay said the decision to build the new tax collection and payment system paid off with early figures, suggesting that Australian buyers would not be influenced by the new tax.
"It has been a big change and it has been a global change that has had to be done," said Tim MacKinnon, eBay's local general manager, adding that the effort has been channeled from its California headquarters.
"Many people have been working on many different teams. We are very proud that we have reached the deadline of July 1."
He added that the decision to give Australian buyers a 10 percent discount on the local, British and US websites, contributed to business generation in the first week of July.
"All of our sites have accelerated," said MacKinnon.
While neither Amazon nor eBay provide data on visitors to their websites, and the Australian online retail market's share of $ 26 billion a year is difficult, customer dissatisfaction with Amazon Australia is not hard to find. His Facebook page is overrun with negative comments.
The move from Amazon has also prompted non-Amazon carriers to buy domestic items from the US and ship them to Australia to take advantage of new opportunities. One such company, New York Big Apple Buddy, has created a new page for Australian buyers this week. However, securities analysts argue that Amazon is playing a long game and can be fixed over time given its track record of dominating online trading in many countries, whichever mistakes are made.
"It is very likely that they will succeed in Australia in the long term, and prices will be competitive, service will be excellent, and they will eat lunch from eBay," Michael Pachter, director of equity research in Los Angeles Wedbush Securities, said by e-mail.
Reporting by Byron Kaye and Tom Westbrook; Additional reporting by Jeffrey Dastin in San Francisco and Nicholas Ford in Sydney; Edited by Edwina Gibbs