There’s been a lot of buzz around Amazon Australia lately thanks to the new tax on Low-Value Imported Goods (LVIGs). Essentially, since July 1, 2018, merchants have to pay a 10% Goods and Service Tax (GST) for each sale, and regarding Amazon specifically, to sell in Australia you now need an Amazon.com.au account.
So why bother? Because for the right seller, the rewards are well worth the price. If you can make up the cost of the tax, the Australian eCommerce market can be quite profitable, as long as your goods fit the bill. Here’s what you need to know before breaking into the great markets down under.
Australian Online Shopper Statistics
Just prior to Amazon’s 2017 launch in Australia, the Nielsen Company conducted a conclusive research study of the Australian eCommerce scene. Their findings are incredibly useful when deciding whether or not it’s worth it to sell there:
- Amazon Australia leans towards younger age groups and males. Sellers targeting these groups, especially young adult men, will have an easier time making up the cost of the tax.
- Aussie online shoppers prioritize a wide range of both products and brands. That favors international brands and products that are hard to find in Australia.
- Shoppers also prioritize fast delivery, so FBA is recommended for your Amazon.com.au account.
- Electronics have the highest chance of selling (67% of shoppers likely to buy), with books (61%) and clothes (59%) falling in second and third place.
- Food products, on the other hand, are not in demand, so if that’s your industry you should reconsider opening up shop there.
If your business and product range fit the criteria, you’ll be one of the few who can reap the benefits of the Australian eCommerce market. That’s the main advantage of selling on Amazon.com.au — less competition. Because Amazon only recently committed to the country in 2017, there are far fewer third-party sellers there than in Amazon’s other marketplaces. And with the new taxes, you can be sure the number of new incoming 3P sellers will slow down as well.
On top of that, as the Nielsen report shows, foreign and diverse products are in demand. That makes Australia an opportune market for the right sellers, tax or no tax.
It’s worth looking into, so see how many — if any — of your competitors are already established in Amazon Australia to gauge whether it’d be worth it for you to join. Keep in mind that Australian sellers are immune from the new taxes, so they’ll be able to undercut a foreigner’s prices easily. Your best bet is to offer products or brands that aren’t readily available in Australia.
How to Open an Amazon Seller Account in Australia
Opening an Amazon Australia seller account is pretty straightforward and admittedly barrier-free — which is good, because you can’t sell on Amazon in Australia without one, thanks to the new laws.
Simply go to the Registration Home Page and follow the instructions to register. You only need the basics:
- The name of the business you want displayed on Amazon Australia
- Your personal name (or the name of the entity that operates the business)
- A physical business address
- A business credit card number (and expiration date)
- The billing address for receiving credit card statements
Additionally, you’ll also need an Australian bank account to receive payments. The good news, though, is that you don’t need an ABN or an Australian entity.
Of course, you want to be aware of the fees before you commit to an Amazon.com.au account:
- A flat monthly fee of AU$49.95.
- GST on all sales: 1/11th of the price listed in Seller Central, deducted automatically. (For more information on the new taxes, including refund policies, read Amazon’s FAQ.)
- Referral fees, depending on the product category.
- Closing fees.
- Standard FBA fees, if applicable.
On the bright side, Amazon.com.au is currently running a promotion to attract sellers to the new market. If you register between now and December 31, 2018, you get the first two months’ fees at half off, and the subsequent six months completely free (no monthly fee). After those initial eight months, though, pricing reverts to normal.
Amazon Alternatives in Australia
While there is a small window of success for some merchants, there are still a lot of drawbacks to selling on Amazon Australia. You may want to consider alternate options.
At the moment, eBay is the leader in Australian ecommerce with a 78% conversion rate. Not only that, but compared to Amazon, it’s a lot easier to register, as in, no extra fees. However, the GST still applies to eBay, and you have to account for it yourself (Amazon.com.au deducts it automatically). The same eCommerce statistics above still apply, but the extra shipping fees from overseas won’t sit well with Aussie shoppers. Again, it will take some planning and strategizing to break even.
While Amazon Australia targets more males and less clothing, if you’re a women’s fashion brand, your best bet is to sell on The Iconic. The top online store for fashion in Australia, The Iconic has a 53% conversion rate and seems to be the go-to website for clothing ecommerce in the country. The downside is that you have to be approved by them. They look for partners with international brand awareness, international fulfillment capabilities and tech skills to utilize a variety of platforms.
In a nutshell, only a small number of sellers would do well in the Australian market, but they will do extremely well. Given Australia’s geography and their foreign policies on international goods, Aussie shoppers love and appreciate exotic and hard-to-find goods. If you can offer them and make up the loss of the GST, you’ll find a market with less competition and more conversions.
This post is accurate as of the date of publication. Some features and information may have changed due to product updates or Amazon policy changes.