Woolworths warns suppliers over Amazon alliance

24 November, 2017 by Andy Young

Woolworths Chairman Gordon Cairns has warned suppliers and manufacturers that stepping “into the breach” with Amazon could result in retailers dropping their products.

Speaking at the company’s Annual General Meeting in Melbourne yesterday, Cairns said that allowing products to be sold on platforms such as Amazon Marketplace could see suppliers lose control of their pricing. That, he warned, could see retailers turn to private label products or drop products from their shelves rather than getting embroiled in a price war with Amazon.

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“Having come from that side of the industry, manufacturing, the question I think they should be asking themselves is, ‘how do we retain control of our brand and our pricing?’ Because if they go on to Amazon and Amazon cuts the price substantially, then what that forces other retailers to do is to reflect on whether they should be stocking the brand, if they can’t do it and make money.”

He added: “The danger is the retailer says, ‘well, if we can’t compete on the branded product then we have to produce our own branded product to compete. So eventually what happens is they can end up cutting their own throat.

“I’m not sitting here telling them what should and shouldn’t do, but I think before they step into the breach that perhaps they should consider what the long-term ramifications are.

“I would say they have to think whether by going on the Amazon platform they actually are able to control their brand and their pricing.”

Meanwhile CEO Brad Banducci told the AGM that Woolworths will monitor Amazon’s pricing and the goods that the online retailer offers.

“We will track it as we go and look at the full cost of getting the products into customers’ hands. We track prices against all competitors and make sure our customers get a good deal every time they shop at Woolworths.”

Many pundits had predicted that Amazon would start its trading in Australia yesterday, ahead of Black Friday today. However at the time of publishing this story, Amazon still only has its books offering for Australian consumers.