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Flight of the Amazon

Rumours abound that Amazon’s planned invasion into the Australia market in September this year has one single focus:  to destroy the Australian retail environment

A recent article published by News Ltd warns that Amazon’s plan is to collect pricepoints on every retail item before setting their prices at a whopping 30 % discount.

Retail king Gerry Harvey has vowed “I will fight Amazon to the death”

Newspaper reports claim that the e-commerce internet shopping behemoth sees great potential in the Australian market because our prices are so high.  Not only will Amazon establish distribution centres in every State and Territory, it is also alleged they will put physical stores and shopfronts on the ground, mostly in regional areas.  In addition to selling almost every conceivable household item and general merchandise, it is expected they will also invade the fresh food industry.

Amazon started 23 years ago, they are worth almost $500 billion, and  Gerry Harvey believes they virtually never paid any tax as they structure themselves to transfer profit overseas in order to minimise tax and appear to make little profit. Harvey claims “Their whole aim in life…is to send everyone broke”

Harvey has said he will form a coalition with his own competitors to campaign against Amazon for “contributing nothing to society”

According to analysis by S & P Global Market Intelligence Amazon paid, on average 13% tax including all local, state and federal taxes. Amazon’s net sales in the 12 months to December 2016 soared 27% to $136 billion, but profit was a relatively low $4.2 billion

Amazon has leased five floors of office space on Park street Sydney and is looking to secure gigantic warehouse spaces to house its massive range of products

Some analysts believe the American raider may struggle against Australians’ brand loyalty. Interesting times ahead!

 

GST to the rescue?

Perhaps it is no coincidence that the Federal Government has ramped up its defence and recently introduced a Bill into Parliament to extend the GST to on-line sales of imported goods under $1,000.

Currently, imported goods valued at less than $1,000 do not attract GST. Amazon has 7,823,246 results for electronic goods alone under $1,000.

It is anticipated that the new GST regime will commence 1 July 2017 and that Australian businesses, particularly smaller retailers, will no longer be unfairly disadvantaged.

Paul Carroll, Partner

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