Some Kiwi firms see Amazon Australia as a threat. Others believe it’s a massive opportunity to crack a major market in good company. Paul Grey is one of its biggest advocates.
Amazon.com.au’s opening in Australia is anything but a threat to New Zealand’s SME (small and medium enterprise) manufacturing sector. In fact, it could turn out to be one of the greatest boosts to our food and beverage, specialist clothing, hi-tech and other locally derived and targeted product producers in decades. Certainly since the global financial crisis.
And it can simplify any Kiwi company’s first foray into the prized Aussie market; always a daunting task for a first-timer.
One man voicing these optimistic predictions (“Amazon will be transformative for Australasia, given the relatively small size of the regional market”) knows what he is talking about too.
Paul Grey has made a great success of guiding similar product producers onto the Amazon marketplace – which has been described as “the Western world’s largest online retailer, offering customers almost any product, delivered almost anywhere, and all at very competitive prices”.
Grey has an established reputation for doing just that in Canada, the UK, Germany, France, Italy and Spain, plus many years’ experience helping Kiwi companies export into the US.
He now stands ready to provide his experience and skills in the Australasian market through his company, ExportX, plus his proprietary software which simplifies the process of getting products listed with Amazon.
“ExportX specialises in representing brands in the Amazon sales channel,” says Grey, adding that it’s not trivial to do it properly. “We’re closely involved in preparations for the Australia launch, and we’re hoping many local businesses will choose ExportX to handle regional Amazon sales.
“In addition, our software arm offers A2X, which is a cloud service, automating the accounting for Amazon marketplace sales. A2X is already processing around $1 billion of third-party Amazon sales worldwide, for more than 1,000 sellers. It will likely be an essential system component for local businesses setting up to sell on the new website.”
Part of the Australia launch will include ‘Amazon Marketplace’, which opens the door for thousands (“or tens of thousands”) of local SMEs to get their products in front of shoppers, “to get the benefits of the super-high level of service it offers its customers”.
“We may also be able to assist with introductions to people who can shed light on other aspects,” says Grey. “For example, there are accountants in Australia who are setting up to specialise in the compliance needs of businesses which will be selling on that platform.
“Your products will find their way into the Amazon channel with or without you. The real question is do you want your products sold on Amazon by online traders, outside your control or with full brand representation, your pricing model and fully supported?”
“If you’re a manufacturer looking for the best way for your products to reach customers across the Tasman, or a start-up grappling with the challenge of getting the attention of shoppers quickly, or a brand owner wanting to make sure your brand is well-represented in one of the most important product reference catalogues, then Amazon Australia’s arrival could be just the opportunity you need,” he adds.
Grey, while outlining the ‘muscle’ Amazon will have, such as free delivery and local pick-up points, reckons “perhaps the biggest risk would be to ignore its arrival”.
False strategy
Grey says it’s a false strategy to think that you can keep your products off Amazon.
“Forget it, your products will find their way into the Amazon channel with or without you. The real question is do you want your products sold on Amazon by online traders, outside your control or with full brand representation, your pricing model and fully supported?”
His advice is to get in early; don’t hang back. Take advantage of being an ‘early mover’.
“Cash-in on the publicity associated with Amazon’s launch, here, in Australia and the sub-region and work in some early product promotions. This is the opportunity of a lifetime to serve customers throughout Australia and the region — at Amazon’s very high level of service and reputation – meaning you can increase your sales-reach overnight, more than likely beyond your current distribution, and probably, your dreams.
“It will pay off – if you do it correctly.”
When asked for a winning formula, Grey says the best way to exploit this major opportunity is to:
1. Ensure you are legally and tax compliant; and
2. Develop in-house online selling expertise and open an Amazon Australia merchant account; or
3. Appoint an Amazon specialist such as ExportX. “I wasn’t going to miss the opportunity,” he says.
Grey believes working with your existing distributors and/or resellers may not be your best option, especially if they don’t have Amazon brand-management expertise.
“Of course, opportunities always come with costs and risks. You’ll be thinking about GST implications; about logistics; and setting up accounting for Amazon, as an extra transaction feed; and the need for product catalogue data to be suitable for the Amazon category uploads.
“In my own experience, since way-back, it is initially seriously difficult to account, by hand, properly for Amazon marketplace sales, fees and the dozens of other Amazon transaction types which pop up.
“The standard sales reports from Amazon’s Seller Central portal are complicated and often fail to match up to actual revenue earned in each accounting period. Fees and adjustments are difficult to understand, even for professional accountants.
“That’s why we developed the A2X cloud software service, used in conjunction with Xero or QuickBooks Online. It automatically maps Amazon marketplace sales and fees into usable accounting journals, and posts automatically to the accounting system, saving hours of frustration for you and your accountant, and huge amounts in lost time and missed opportunities. Not to mention fees.”
Grey says your books will be reliably accurate and up-to-date; won’t clutter your accounting system with floods of Amazon transactions, but will still show enough detail to let you make informed decisions about your business, day-to-day, and in the long term.
Track record
Sure you can dismiss this as Grey being opportunistic. But he has some form and a credible and successful background in this niche. His background is in software development (he was CTO of Peace Software, which over 20 years went international, successfully breaking into the US market, where he was based for much of that time. (Peace was sold to a Fortune 500 company in 2006).
And, he has, as he puts it, “been at the birth, childhood and now maturity of the Amazon FBA (Fulfilment by Amazon) marketplace phenomenon”.
This article by Kevin Kevany first appeared in NZBusiness, February 2018 issue.
