Amazon puts fear into locals

AMAZON could own eight per cent of Australia’s consumer electronics market within just five years, pushing local players including JB Hi-Fi to close stores.

Investment bank Citigroup says Amazon, which recently confirmed it will roll out its full online marketplace in Australia, is on average about 15 per cent cheaper than Australia’s consumer electronic retailers.

Citi says JB Hi-Fi and Harvey Norman will likely cut their average sale prices by about 10 per cent when Amazon arrives in 2018-19, and has therefore cut its long-range earnings forecasts for the pair.

“Amazon is set to drastically alter the competitive environment for electronics retailers,” Citi analysts said in a report.

“We have downgraded our long-term earnings forecasts by more than 40 per cent for JB H-Fi and more than 30 per cent for Harvey Norman.”