Dick Smith: Don’t be mistaken, Amazon will “slowly strangle” and “destroy” Aussie retailers

Prominent Australian businessman Dick Smith says those underwhelmed by the launch of Amazon Australia yesterday don’t understand the power of the global retailer, predicting it will ultimately “slowly strangle” Australian businesses that are powerless to stop it.

“I know it will be immensely successful,” Smith tells SmartCompany on Amazon’s presence in Australia.

Amazon officially launched in Australia on Tuesday morning, after months of speculation and analysis. But almost immediately, shoppers began taking to social media to question the prices on offer.

Many consumers, it appears, expected Amazon’s offering to be cheaper than Australian retailers across the board.

so the item I left in my #AmazonAustralia cart and went to buy cheaper @DavidJonesStore changed overnight but still no match #AmazonAU fail

— Kaynine (@Irgendjemand_01) December 5, 2017

However, Smith believes the “extreme capitalism” which has always been on display from Amazon — from its laser focus on maximising profit, to the way it has minimised the number of staff required to deliver products — means the only long-term outcome for the company in Australia is success at the expense of retail incumbents.

“They are incredibly cunning, the greed is unlimited, and they are in control of everything they are doing,” Smith observes.

He warns retail stalwarts watching the rollout of Amazon Down Under should not be lulled into a false sense of security by customers appearing to be underwhelmed by the initial product offering.

The company is playing a long game, he says, and the ultimate effect will be lost jobs.

“They are going to slowly strangle the big businesses and destroy them. Typical Australian workers will be affected,” Smith says. 

While Amazon’s business model is “brilliant”, Smith says Australians have to understand that the company acts to serve the interests of maximising products from shareholders. He believes that focus on profit represents “self-destruct capitalism”, and while Amazon Australia country manager Rocco Braeuniger has pledged to bring “thousands” of jobs to Australia, many local jobs will be lost as local retailers shut up shop.

“When you click to buy something from Amazon, say every 100,000 items sold is another Australian job gone. Well, something doesn’t pop up when you buy saying, ‘Haha! Another Australian job gone!”

When asked about the future of the local retail sector, Smith believes there is actually little that smaller retailers can do to get ahead of Amazon in the longer term.

Taking a view well beyond the initial launch of the business, he says Amazon will change the landscape of Australian business not because of a new idea, but because of an aggressive strategy that prioritises efficiency and profit over job creation.

While punters may be complaining about price points initially, Smith believes that, based on Amazon’s pricing strategies elsewhere, eventually its model will match consumer’s price desires here too.

“It’s not as if they’ve invented some fantastic new product,” he says.

“But I do think it’s an incredibly successful formula.”

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