How Amazon's Australasian invasion will change the way we shop

by Mark Broatch / 17 October, 2017

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The global online sales giant is preparing to set up down under, and life for shoppers and retailers is about to change big-time.

Shamubeel Eaqub is looking forward to the arrival of Amazon in this part of the world, if for slightly personal reasons.

When the first trucks roll out of the doors of Amazon’s Melbourne warehouse, possibly in the next few weeks, the initial benefits for New Zealand consumers will be cheaper goods, such as home electronics, sports goods and clothing, delivered more quickly.

But for Eaqub, an independent economist, the welcome aspect of the flood of brown boxes with the smiley logo will be the range of products.

“The biggest benefit for consumers is that you have access to product ranges that are simply not possible otherwise. A short person like me can buy pants that don’t have to be shortened when they arrive here.”

It’s not just about saving a trip to the tailors, of course. Amazon sells pretty much everything: books, big-brand fashion, homewares, food and even car parts. But 23 years after its founding by Jeff Bezos, Amazon is much more than a giant online bazaar; it’s an e-commerce colossus.

Its revenue last year was US$136 billion ($185 billion), and it has a massive share of the globe’s data storage, logistics, online payments and streaming media business – its spending on original video content approaches that of Netflix. Conservative estimates have it hitting US$1 trillion in revenue within 10 years at its present growth rate.

Because of Amazon’s size, ambition and long-term strategy of reinvesting rather than banking profits, analysts have predicted tough times for Australian retailers as the global giant begins luring eager customers with aggressive pricing, slick delivery and generous exchange policies.

Bosses are rattled and shares in some of the country’s biggest retailers have taken a hit: Citigroup cut its long-range earnings forecasts for JB Hi-Fi and Harvey Norman, and shares in department store Myer took a dive.

Amazon already does about A$1 billion ($1.1 billion) in business in Australia by shipping from overseas, but investment bank Macquarie has predicted that it could hit A$14.5 billion in online sales by 2025 (total annual retail sales in Australia are about A$300 billion) at the expense of “department store/discount department store category, electrical/home appliances, sporting goods, apparel and, to a lesser extent, food”.

A widespread view is that the company will aim to sell products at about 70% of local retail prices. The company reportedly told a senior Australian hedge-fund executive, “We are going to destroy the retail environment in Australia.”

Jeff Bezos founded Amazon, which has gone from online bazaar to e-commerce colossus. Photo/Getty Images

High noon on the high street

Businesses on this side of the Tasman are also watching and making plans. Since many retailers operate in both Australia and here, and our small and open economy is just three hours away, Amazon could hit local retailers hard. Consumers may welcome a flood of cheaper laptops, clothes, sports gear and books arriving after just a couple of days, but the worst-case scenario is of high streets lined with “For Lease” signs and malls emptied of middle-market shops.

Apart from confirming its arrival in Australia and renting a former Bunnings warehouse in south-east Melbourne, however, Amazon has kept its cards close to its chest. In April, it announced it will offer Marketplace, which lets businesses sell their goods through the site. Despite media reports, the company has yet to confirm that it will offer its subscription delivery service Prime or any of its grocery or food delivery services.

It has begun hiring what it says will initially be hundreds of product “pickers” and appointed Rocco Braeuniger, one of its longtime German executives, as country manager. In the April statement, it noted that Amazon Web Services launched in the Australian region in 2012, a Kindle store opened the following year, “and we now have almost 1000 employees in the country” – though it didn’t elaborate on just what these people were doing.

It launched its Prime video-streaming service in this part of the world late last year, jumping into a stiff competition with Netflix, Lightbox and Neon by offering movies, TV programmes and Amazon-created shows such Transparent, Fleabag and the post-Top Gear Clarkson-Hammond-May show The Grand Tour.

The Listener asked the company, through its PR representatives, to clarify what it might be offering in Australia and, by extension, in this country. They referred us back to the brief statement, which talks of bringing “thousands of new jobs to Australia, millions of dollars in additional investment”.

So what will Amazon offer down under? Marketplace is likely to be extended to include New Zealand companies. Amazon Prime, for which subscribers pay an annual fee – it’s US$99 in the US – in exchange for no-charge two-day delivery and unlimited streaming of TV and films via Prime Video, could potentially be extended here. Grocery delivery is on the cards in Australia: the company has already been advertising AmazonFresh job vacancies in Brisbane. Amazon Prime Wardrobe, which lets you try on a selection of clothes and send back those you don’t want, for free, has also been tipped for Australia.

Amazon Go, its developing chain of bricks and mortar stores, is possible in the longer term, though it would almost certainly first need to buy into an Australian retail operation. The Book Depository, an Amazon subsidiary and a Kiwi favourite because it sells in New Zealand dollars and includes the delivery fee in its aggressively low pricing, is likely to push for a deal with local publishers.

Last year it added more than 25,000 Australian titles to its 14-million-strong inventory and said it would ship books locally and internationally from Melbourne. Already it sells some NZ books, largely those with parent companies in Australia. It might open a bookstore or two in Sydney or Melbourne.

Online orders are filled by robots in an Amazon fulfilment centre in New Jersey. Photo/Getty Images

How hard will it hit?

Australian retailers are right to worry about Amazon’s arrival. A report released in May by online-commerce analyst Hitwise revealed that its customers most often searched for and bought on Amazon’s US site Kindles, books, toys, electronics and computers. Research company Nielsen found that Amazon US makes a sale to nearly half of Australian visitors – eBay converts 78% and the Book Depository 74%.

About half of adult Australians surveyed said they were likely to buy from Amazon’s Australian site, and 45% said they would pay to become a Prime member to get the discounts and fast delivery. Prime has proved a very lucrative loyalty machine for the company: about two-thirds of US households subscribe, and they spend an average of US$1300 a year on the site.

Surveys suggest that appeal is almost certain to be replicated here, though Forsyth Barr believes the impact on retail companies will depend on whether Amazon treats New Zealand as an add-on or a market in its own right. In a report published in July, the investment services firm suggested three possible models: if Prime were not offered here, goods would arrive typically in three to five days; a limited Prime service, with a warehouse in Auckland, would mean a wait of two to five days; and full Prime could cut it to between one and three days.

Amazon says Book Depository delivery from Australia will take three to six days; within Victoria metro areas one or two days, and NSW metro areas two to three days. Anyone who has bought from Amazon’s UK or US websites knows that goods take at least a week to arrive here, so getting products in a few days may make a marked difference to customers.

If full Prime meant an Auckland fulfilment centre and a dispatch warehouse in, say, Christchurch, Amazon could snatch 13% share of the e-commerce market and more than $900 million in sales in five years, Forsyth Barr says. Shares in The Warehouse Group, Briscoes Group, Sky TV and smaller mall companies were among those it highlighted as being at risk.

As for pay TV, the report notes that Amazon may bid for content that could achieve “immediate critical mass”, noting that the rights for the Sanzaar rugby championship, owned by Sky until 2021, are “relatively cheap” at perhaps $60 million a year. Sky’s share price recently dropped to an 18-year low.

Amazon spends US$4.5 billion a year on original video content compared with Netflix’s US$6 billion and HBO’s US$2.5 billion. It has, Forsyth Barr says, “a massive library but lacks original content”. And deep pockets. Amazon, it has emerged, is bidding against Apple and Warner Bros for the film distribution rights to the James Bond franchise.

If there is some gloominess in the local retail scene, some see opportunity amid the risk. Bosses of listed outdoor goods retailer Kathmandu are reportedly relaxed about Amazon’s impending arrival. The company, whose annual profit, just reported, was up 14%, has been selling on Amazon in Europe for more than three years. But it remains in charge of its internet sales: on TradeMe here and eBay in Australia, it decides what to sell at what price and how to promote it.

“Retail share declining”

“What we’re seeing over the past four years, quite consistently, is that retail’s share of online spending by New Zealanders is declining,” Greg Harford, Retail NZ’s public affairs manager, told the Listener. “We’ve gone from having 66% of that market in 2012 down to 55% now, and we’re forecasting that trend will continue. New Zealanders will be spending more offshore than they are on New Zealand websites within a couple of years.”

Online spending is increasing much faster than in-store spending, so the impact is likely to be even larger. Retail NZ, whose members make up about two-thirds of retail turnover, accepts that some goods cost more than they do offshore. A good part of that is down to scale: in our small market, retailers don’t have the buying power to make deals and they also often only carry partial product ranges. “Those are the challenges that retailers need to work through to try to compete internationally,” Harford says.

The Warehouse Group chief executive Nick Grayston, a former executive of US retail chain Sears, views Amazon as its main competitor. The group includes The Warehouse, Noel Leeming, Torpedo 7 and Warehouse Stationery. “We know it raises the stakes for retailers in New Zealand.” To fight Amazon, Alibaba and the likes of K Mart, the group, which recently had a significant profit drop, has reduced the number of product categories it sells, launched its own homewares brand, cut staff and beefed up its online offering. The Warehouse Group and NZ Post have also launched Shipmate, a subscription-based delivery service something like Prime.

The largest local businesses have already been adapting to e-commerce and offshore threats in other ways, says Eaqub. “They do a lot less inventory-keeping and are pushing it on to the logistics sector rather than doing it themselves.” The amount of inventory retailers hold has fallen substantially over the past decade, he says, and large products such as fridges or televisions are usually delivered to your house from the distribution centre. Perhaps coincidentally, JB Hi-Fi announced in July that it would no longer stock whiteware.

Boutique or exclusive retailers are likely to focus even harder on their product range, service and customer-loyalty programmes. “Businesses that have unique and differentiated products can develop aspiration around their brand and deliver an outstanding online experience have an edge that can’t be replicated,” retail consultancy First Retail’s Chris Wilkinson told a conference in August.

A delivery to Seattle’s Pike Place Market. Photo/Getty Images

Buyers’ joy

Having Amazon in Australia will make it quicker and easier for goods to get here, says Harford. And cheaper? “Certainly. Freight costs across the Tasman are undoubtedly cheaper than [having goods come] from the US or Europe.” But the costs will depend on how firms price goods and freight, he says. Amazon loses more than US$7 billion on shipping each year, according to Deutsche Bank, as it focuses on growth. For consumers, of course, marketplaces such as Amazon – and Trade Me, Mighty Ape, Fishpond, eBay and Chinese giant Alibaba – enable comparisons between retailers.

“Unless retailers start to go on these online marketplaces,” says Eaqub, “they are going to have real difficulty in reaching consumers. Because right now, they sell through their own websites, but you have to wait for somebody to go to your website. Whereas when I search for a couch online, I don’t go ‘Harvey Norman couch’, I go ‘couch Auckland’. It’s about going through as many channels as possible. It’s giving Amazon even more dominance. But if you’re not in the marketplace, how can you participate?”

It’s inevitable that New Zealand companies will sell through Amazon and some may even join its global infrastructure and supply chains. The company has hundreds of warehouses and delivery hubs, operates thousands of trucks, leases more than 20 aircraft and is planning fleets of drones. Logistically it makes sense, Eaqub says, even if it means handing over money to a company you compete with, perhaps at several points.

Many consumers will shop at Amazon even though they know that threatens local retailers, because of the savings and convenience. Media reports and Brad Stone’s 2013 book The Everything Store describe a company that values sales and productivity over everything else; a dog-eat-dog culture in the white-collar ranks and relentless, union-unfriendly management of those in overalls. One US report claimed that employee trips to the toilet were discouraged because they interfered with productivity.

When a 2015 exposé by the New York Times depicted a harsh working environment, Bezos told employees that “the article doesn’t describe the Amazon I know”. But there are other complaints: the apparent nonchalance about decimating the high street, steamrolling smaller retailers and hoovering jobs out of the economy. This includes its own: the company bought Kiva Systems, which makes robots for warehouses, and already has many thousands of them in service. Other reports concern the company’s sometimes-cavalier treatment of partners and suppliers and its merciless competitiveness – it will endure losses in parts of its business to keep building growth.

Photo/Getty Images

Tax complaints

The biggest complaints are about tax. Amazon has long resisted collecting federal and sales tax from its customers in the US, to the point, as one report noted, that it was endangering spending on government services such as libraries for those who can’t afford to buy books at all. Then there is the amount of tax the company itself pays: in August, Amazon reported that it paid €16.5 million ($27 million) in tax on European revenues of €21.6 billion in 2016 – a rate of about 0.075%. Turnover at the UK operation rose to £1.5 billion but tax payments fell from £15.8 million to £7.4 million year-on-year. Retailers in the UK railed that the council rates paid by bricks-and-mortar stores were much higher than Amazon pays for its warehouse operations.

What about books? Eaqub often buys books on Kindle, but he feels that local bookstores have already responded well to the online threat. “Bookstores are amazing now. The ones that are left have great advice, good collections and quirky stuff you wouldn’t be able to get online.”

A few years ago, bookshops were complaining of people browsing their shelves only to buy their books online. You don’t hear that any more, says Booksellers NZ chief executive Lincoln Gould. “We’ve faced up to Amazon and Book Depository for some time. The independents in particular have worked hard to improve and develop their competitive advantages over Amazon in terms of the community of customers that they can create, and giving people coming into the shop a service that Amazon can’t provide.”

A wider variety of titles is usually now available in bookstores and readers get reliable recommendations they trust (beyond the often unhelpful “Customers who bought …” pointers), and they get to touch and peruse books in a way that Amazon’s “Look Inside” feature can’t provide. Serendipity is real because bookshop curation is still as much an art as a science that Amazon hasn’t yet figured out.

People who buy online from Amazon are likely to get books here a day or so quicker than before, says Gould. He thinks book prices on Amazon might not be being devalued as they once were. “One of the issues here is that all of the major publishers have retreated back to Australia, so we don’t have the distribution services.”

Still, expect robust competition from Amazon/Book Depository: it has history. The Kindle was launched in 2007 and the company priced e-book bestsellers at US$9.99, far less than new hardcover titles, which helped Amazon gain the lion’s share of e-book sales. When the US Government looked into the pricing as part of a price-fixing investigation of Apple and the largest book publishers, it concluded that Amazon’s behaviour was “loss-leading” rather than “predatory”. Even if GST were imposed, the Book Depository might pose a big risk to local booksellers. In a little-noted move, in June it asked to join Nielsen NZ’s publishing data analysis service BookScan (it is expected to do the same in Australia). It didn’t give a reason, nor did local online retailer Fishpond or discount chain Kmart, which joined at the same time. But Nielsen’s Nevena Nikolic says it makes the data more rigorous.

Whitcoulls is not part of BookScan, but most of the other local book retailers are. As noted, last year Amazon added thousands of Australian titles to its inventory and said it would ship books out of Melbourne. Australian publishers did a deal with Amazon/Book Depository, although some refused. No deal has been struck with NZ publishers, says Publishers Association president Melanie Laville-Moore, although those with Australian parent companies and warehouses are likely to be sold by the Book Depository anyway. Kmart, for its part, might start selling books here, as it does in Australia.

Bezos. Photo/Getty Images

GST question

“The big problem for bookshops and other small retailers is the GST issue,” Gould says. “It’s a 15% disadvantage for the booksellers before they open their shops.”

Forcing Amazon to charge GST on all items that arrive in the country would help make competition more equitable. As the law stands, imported goods valued at less than $400 don’t attract GST. Next July the Australian limit will be $0. Harford said the National-led Government had moved “at a glacial pace” in dealing with what it had said was a “priority” issue.

“To some extent it missed a trick last year when it introduced GST on digital services and didn’t go down the same track with low-value goods,” he says. “That created the absurd situation – Amazon’s a good example – where they can sell an electronic book or album to a New Zealander and they now have to pay GST on that, but they don’t if they’re selling a physical copy.”

The Government appeared ready to announce a lowering of the threshold, but the election campaign presumably put the kibosh on any mention of new taxes. Revenue Minister Judith Collins’s office told the Listener in August that the Government acknowledges not collecting GST on low-value imported goods “is an issue and remains committed to implementing a means for collecting GST that is fair, robust and sustainable”.

As is often the case, the GST impost on digital goods – the so-called Netflix tax – has already raised more money than expected. For the nine months between October 2016 and June 2017, $72.5 million was gathered: the conservative forecast had been $40 million a year. Harford says the sums from digital sales “are substantially lower than the revenue the Government is missing out on from low-value goods. We’re estimating that to be at least $235 million [a year]”

Forsyth Barr says Customs, which collects tax and duty on low-value goods, expects the volume of low-value imported goods from e-commerce to increase at a compound annual rate of more than 14% over the next five years. The e-commerce market here is worth roughly $3.5 billion, says Harford, so perhaps $1.6 billion worth is coming in. “It’s a big sum of money, and we know that the 3% of global e-tailers we’re shopping at account for perhaps 97% of all transactions. So if you could get the top 100 e-tailers registered for GST, you’d go a long way to solving this problem.”

NZ Post says it expects more Amazon parcels arriving in New Zealand to come from the company’s new distribution centre once it opens in Australia. About 424,000 parcels enter the country each year and have tax collected, says Retail NZ, but hundreds of thousands more arrive with no tax paid. Harford believes the system, in which Customs handles low-value goods in an inspect-contact-release fashion, should be handed over to Inland Revenue with tax prepaid. “The Government needs to look at what the Australians and the Europeans are doing and move to register foreign companies for GST so that the goods can just flow seamlessly across the border.”

It won’t fix everything. “If the Government were to move on the GST issue, that’s not going to solve all the problems facing New Zealand retailers. There are a range of issues, and scale is one of the bigger ones. We’re certainly going to see continuing adjustment in the market.”

It might even work against New Zealand books if Amazon was required to impose GST: books in the UK, for instance, are zero-rated for VAT.

Eaqub doesn’t think the effect of Amazon’s arrival in Australia will be sudden or massive. “We’re not going to see large-scale closure of retail stores as a result of this, because we already have this access online.” It will also take time for Amazon Australia to scale up.

It will be substantially larger than what’s on offer now, but don’t expect what you see on or, says Eaqub. Many of the goods on the US and UK sites can’t be shipped here, but NZ Post and other courier services have schemes that let you ship to a foreign address and have it forwarded to you.

But Eaqub sees other dangers. “The biggest benefits will go to rural consumers, because they will have access to range and choice that they’ve never had before.” They are likely to keeping moving their dollars online more than shoppers in the cities, so the small-town retail sector is going to be hit even harder than it has been in the past couple of decades.

“As you move money online, it goes missing from the local community, so there are knock-on effects.” Bigger cities are always going to have enough people to support bricks-and-mortar retailers.

Karen Walker was on hand for the opening of a TopShop store in Auckland. Photo/Getty Images

Bearing the brunt

Sellers of such items as furniture and technology will feel the brunt first, Eaqub suspects. Electronics and computer prices will go down, partly because shipping from Australia is “really cheap”. The main problems buying online through the US previously were voltage and plugs, as well as a lack of warranty, which might remain a barrier.

Amazon may start selling fresh produce and groceries in Australia, but it won’t happen here for a long time, says Eaqub, because the market is too small and “nobody wants to come here with their big offerings”. He thinks the arrival of Amazon at this end of the world is part of the continuing move online and the globalisation of the retail sector. “Not all retail will go. There will be lots of products people will still want to buy locally, those that require after-sales service or good advice. Those things still require retailers.”

What we’re also seeing, says Harford, is online retailers establishing bricks-and-mortar presences. The two are complementary, and to be a successful retailer in the 21st century you are likely to need both. Storage spaces might become more like showrooms, he says. There are always going to be retail stores, he says, but they will look different and be focused on customer experience. He reckons shopping is almost a pastime: “New Zealanders love to shop.”

We seem to. We flocked to H&M, Zara and the recently departed Topshop when they arrived – the last upping sticks after failing and not being able to attract a buyer – and there’s been a long-running campaign to get Ikea to set up shop here. It may be that the Swedish flat-pack giant never does, since it appears to have a thriving alternative market on Trade Me, says Eaqub. In June, it said it would begin selling through third parties next year, which almost certainly means Amazon and the likes of Chinese market Alibaba. You might soon be buying your Bjursta table or Kallax shelves on Amazon.

And what of Amazon itself? It will keep getting bigger and more dominant. Scott Galloway, a professor of marketing at New York University, notes that of the digital giants, Amazon is victorious in almost every battle it’s had of late. In its virtual assistant platform Alexa, in searches beginning on the site, in streaming, the growth is with Amazon.

“In every area, it is coming up against Apple, [Google parent] Alphabet and Facebook, it is winning.” The thinking is that it has so far largely evaded antitrust scrutiny because even though it has trampled competitors, it has also improved life for consumers. Galloway believes it will become a trillion-dollar business before being broken apart by an ambitious prosecutor. Which, for some, will be too late.

Many global retail giants now sell goods through Amazon. Photo/Getty Images

Doing business with the devil

The world’s largest companies are accepting Amazon’s vast ecosystem as an unavoidable part of doing business. In June, Ikea said it would begin selling through third parties next year, which almost certainly means Amazon and Chinese colossus Alibaba. The giant US chain Kohl’s is to open Amazon shops in its department stores; struggling US retailer Sears and sports giant Nike have separately announced they will sell through Amazon; most top sports-clothing brands appear on the site; Amazon is likely to become the world’s biggest apparel seller this year.

Sears knew that people would stop going into its stores, but it needed the sales: its market value fell 96% between 2006 and 2016; Amazon’s rose nearly 2000%. Sears shares jumped 20% following the Amazon deal.

Companies that cut deals with Amazon are under no illusion they are supping with the devil. Simply by entering a new market, Amazon can obliterate a company’s business. When it was revealed that Amazon had filed a trademark of the marketing phrase “We do the prep. You be the chef”, the share price of Blue Apron, a publicly listed US meal-kit company, took a steep dive. That’s just a trademark.

Amazon runs a large part of “the cloud” by way of its astonishingly lucrative Amazon Web Services (AWS) division, and hosts the online infrastructure of so many companies it is sometimes called the “Amazon tax”. Some of its rivals think AWS has become so big that it may be subsidising the company’s retail business and “underwriting” its war with retailing giant Walmart.

Theoretically, Amazon could clip the ticket of companies doing business with it several times: selling their goods on the site, accepting their visibility-boosting advertising, hosting their own e-commerce services via AWS, and delivering their goods via “Fulfilment By Amazon” (FBA), which also handles service and returns.

Amazon has a long way to go in bricks-and-mortar retail. Walmart has more than three times Amazon’s retail revenue and 90% of worldwide retail spending is still done offline, say analysts. Even with the Whole Foods supermarket chain purchase, Amazon was predicted to have less than 3% of the US market share in groceries. That means much more room to grow, as more retail heads online and the separation of clicks and mortar becomes invisible through one giant fulfilment chain.

Amazon is making good use of the profusion of brands it sells. Aware of its vast eyeball-reach – more than half of US consumers reportedly start online searches on the site compared with 28% for search engines and 16% on retailer sites – it is encouraging brands to buy ads on its site. As US digital agency head Sarah Hofstetter told the New York Times, “Amazon is the new shelf space, and if you’re not on it, you may be rendered invisible.”

Amazon’s share of the online ad market is a fraction of Google’s and Facebook’s, each about US$25 billion annually, but forecasts are bullish. The company also has a good head start with voice search through its Alexa virtual assistant – another challenge for brands more offline than on. Martin Sorrell, chief executive of ad and PR multinational WPP, has said, “What happens if I say to Alexa, ‘I like Cheerios,’ and Alexa says, ‘I’ve got Kellogg’s Corn Flakes, which are 10% off’?”

TV shows, such as Fleabag, were Amazon originals.

The everything shop

What does Amazon sell? It’s more a question of what it doesn’t. Initially, when it set up in the 1990s, Amazon flogged books. They were portable, relatively cheap and came in enormous variety. It soon expanded into CDs, DVDs, electronics and toys. It now sells, among other things, clothes, jewellery, homewares and food. Amazon recently launched its own-brand clothes lines (Prime Wardrobe lets you try first and send back free) and has been revealed to be selling a huge range of products under undisclosed brands such as Mama Bear, Happy Belly and Denali. In the early 2000s came Amazon Web Services, and the company is now one of the largest providers of cloud infrastructure services, making more than US$900 million income last quarter on US$4 billion in revenue, heading for US$16 billion for the year; Netflix, which now accounts for more than a third of peak download traffic in the US, uses Amazon servers.

In 2005, it launched Amazon Prime, which delivers goods without extra charge if you pay an annual fee (Prime Now delivers in two hours); libraries of streaming video and music were later added to the service.

The company’s original video content – shows such as Transparent, Top Gear offspring The Grand Tour and Fleabag have been produced by Amazon Studios since 2010 – is now competing with Hollywood (it also produces video games).

AmazonFresh, its grocery delivery service, arrived in 2006 and now serves some US cities, London, Berlin and Tokyo. Its purchase this year of greenish North American chain Whole Foods will accelerate its goal of delivery of groceries. In August, it debuted “instant pickup” sites at several US universities, expanding on existing same-day pickup sites.

The Kindle debuted in 2007. Writers can self-publish their books in digital form, or print-on-demand; occasionally, one – such as Andy Weir’s The Martian – becomes a global hit.

In its 23 years the company has bought companies useful to the mission, apparent in its logo, of offering products from A to Z, if not also for cross-marketing and ticket-clipping. These include book referral site Goodreads, audio book site, comics site ComiXology, and the UK-based Book Depository, said to have been picked up for north of £100 million. In 2015, it opened its first physical bookstore, now has a dozen, and plans hundreds more.

Amazon also sells a range of electronic devices including Fire tablets and, since 2016, Echo, its “smart speaker” personified by virtual assistant Alexa. The aim, it’s clear, is not to make money off the hardware but to keep selling digital content to its customers.

Although Amazon produces an increasing amount of what it sells, reportedly half of the goods it shifts are via third-party sellers through its Marketplace, from which the company takes a cut, and its Affiliate Program, which links ads on other sites to Amazon, is said to be the second most popular online ad network after Google Ads.

This article was first published in the October 7, 2017 issue of the New Zealand Listener.


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