I suspect the deal internally is quite simple: any orders from the US are handled in AU (if have stock, ship from here), if not then do it internally.

However, I've been watching them closely and can guarantee its to disrupt the AU pricing downwards. Suppliers here have attempted to treat Amazon as simply a bulk merchant, such as they would MetCash. By "accepting defeat" and opening AU orders to the US site, this is a simple method to hammer/anvil blow local suppliers downwards.

Secondly, If you look around the site, you'll see huge price discrepancies between the AU site and US. This is due to the vast number of sellers simply using AU like eBay (i.e a sales front, or "logistics partner"). The manufacturers haven't jumped in (exceptions are J&J, Unilever, etc, which already bulk-ship direct to them).

This will destroy the perverse "businesses" that have sprung up selling OS stocks locally at ludicrous markups. These rent-seekers model is simple. They put an item on AU at 3X the cost, get their US cousin/sister/uncle to daily ship from the US and redirect/relabel when it arrives. This ticket-clipping type business is exactly what Amazon sought to destroy.... so hence the move.

The Amazon model is the oldest internet business there is: Disintermediation.

Now AU has all the local search stats for a full year, they will bulk import everything in the top 10% requests and let the ants fight over the profitless scraps.