Who will win from Amazon's push into Kiwi markets?
OPINION: E-commerce giant Amazon has turned its gaze to New Zealand. Three and a half years after landing Down Under, Amazon has opened up its Australian store to Kiwi buyers, who were previously limited to buying items from the United States. The significance of this first step into New Zealand shouldnt be underestimated. New Zealand retailers have been some of the luckiest in the world over the past few years, living a blissfully Amazon-free existence, with no convenient one-stop, cheap port of call for electronics, gadgets and pretty much everything else. The status quo is about to change, and the fallout could get messy. Kiwis are already changing their spending habits. According to NZ Posts latest e-commerce report, online sales increased significantly during the Covid pandemic. More than one in 10 sales (11 per cent) are now processed online, and shoppers spent $5.8 billion on online shopping last year, a 25 per cent increase on 2019. READ MORE:  * G20 finance ministers back plan to stop use of tax havens  * New Zealand businesses urgently need a strategy for Amazon  * Amazon in a world of trouble    This trend has plenty of room left to run in New Zealand. Online sales represent roughly 20 per cent of all sales in major markets such as Britain. And while the pandemic accelerated online shopping in New Zealand, Amazons entrance will be another catalyst. The tide is heading in one direction, and e-commerce will continue to erode the traditional brick-and-mortar retail business model. The high street.  Last week, Retail NZ chief executive Greg Harford said he did not believe that Amazons entrance to the New Zealand market would be that huge in the short term. Yet that ignores the fact that many traditional retail business models are already in long-term decline. The high street. In markets like Britain, large department stores and electronics retailers have felt the pain, burdened by costs Amazon simply doesnt have. Brick-and-mortar retailers, particularly those occupying large sites, are already under significant pressure. In New Zealand, David Jones will close its Wellington store as it moves online. In the more mature British market, prominent department store Debenhams collapsed during the pandemic, while US clothing giant GAP also closed its British stores, shifting to online-only. The developments overseas offer a glimpse into the retail sectors future, and with more than 208,000 people working in the industry, thats a concern. Disruption is coming, and there is nothing traditional retailers can do about it other than try to improve their own e-commerce offerings. There will be some winners from Amazons decision to go for the Kiwi market. For every department store and home appliance seller that struggles, smaller domestic producers will be given access to a broader international customer base to export their goods. Amazon will be potentially transformative for some. What it means for the customer and public is less clear. Yes, we will be able to get our hands on cheaper items in many cases (though the import costs and GST may add up), but Amazons convenience also brings with it some of the more unsavoury elements of aggressive capitalism. AP Amazon founder Jeff Bezos is so rich that he has now turned his attention to the space race. Amazon has become so successful undercutting other retailers that it is now worth more than US$1.87 trillion ($NZ$2.66t). Its founder, Jeff Bezos, has become so rich (worth more than US$213 billion) that he has turned his attention from Amazon to the space race. At the same time, the company has drawn criticism for the working conditions and pay at its warehouses, and its efforts to prevent workers from unionising. For a small country like New Zealand, the impact of a behemoth like Amazon will be huge. Although the company will operate from Australian fulfilment centres, the decision to target Kiwi customers will inevitably fuel predictions of a New Zealand fulfilment centre before long. Amazon has come under fire in major markets for its complex tax structures, shifting revenue from higher rate jurisdictions to lower-tax regions. The recent G7-led global tax reforms are partly designed to force the tech giants to pay more tax where they earn revenue, as national governments struggle to contain their activities. Victoria Plekhanova, a lecturer at Massey Universitys school of accountancy, says the jury is out on whether Amazons interest in New Zealand will be a net positive for the taxman. She says that while the country will collect more GST if Amazon boosts consumption here, the use of its intermediation services will be taxed overseas. With no physical footprint or employees here, Inland Revenue wont have any salaries to tax either. Plekhanova questions whether the additional GST and income tax reaped from local suppliers will make up for the disappearance of other retailers and Amazons untaxed profits due to its remote participation in the economic life of New Zealand. Amazons push into one of the last untapped western markets will be fascinating to watch, as will the reaction of the retail sector in the face of this threat and opportunity. For retailers, the Amazon-free utopia is coming to an end, and while some customers will see benefits from the disruption, it will spell imminent danger for many businesses.