Amazon Aust Services Melbourne – ROMEOVILLE, IL – AUGUST 01: Employees pack and ship customer orders on August 1, 2017 at Amazon’s 750,000 square foot fulfillment center in Romeoville, Illinois. On August 2, Amazon will hold a job fair in several fulfillment centers across the country, including the Romeoville facility, to hire more than 50,000 workers. (Photo by Scott Olson/Getty Images)
US retail giant Amazon.com ( AMZN ) announced its first warehouse location in Australia on Thursday, choosing an industrial estate outside Melbourne, a major step towards launching operations in the world’s 12th largest economy.
Amazon Aust Services Melbourne
Australians are already able to buy Amazon products overseas, but the prospect of Amazon warehouses will increase pressure on brick-and-mortar retailers to protect already fragile sales.
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The Seattle-based retailer has confirmed that it plans to bring its online shopping service Amazon Marketplace to Australia in April, without saying when it will launch the service or where its warehouse will be located in the vast country.
It has not said when it will launch the service in Australia, or which freight services it will hire. Amazon Marketplace charges retailers to advertise on Amazon’s website and use Amazon’s network of warehouses and merchandise.
“Over time, we will bring thousands of new jobs and millions of dollars of investment to Australia, and open up opportunities for thousands of Australian businesses to sell through the Amazon Marketplace at home and overseas.”
Bruce added that the warehouse, about 42km (26 miles) from Melbourne, has “hundreds of thousands of products available to customers across Australia”.
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Australian trucking companies face the challenge of serving a country of just 24 million people on a continent nearly the size of the United States.
But with four-fifths of the population on the east coast, Melbourne or the big cities of Sydney are obvious choices for Amazon’s first warehouse. I have been reading a lot about Amazon and trying to figure out what impact it has on business. in Australia as they build a presence in distribution and potentially retail that can rival even our biggest local brands.
Amazon’s distribution warehouse in Australia has been speculated since 2012 (ref: SMH), but it seems that it will happen in the next 12 months. Is 2017 the year it finally happened?
It has been announced that AmazonFresh will launch grocery delivery in Australia in early 2018. Smart Office has indicated that “Amazon is making a major push into Australia” and that the retailer is preparing for the inevitable competition from Amazon.
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Justin is an investment officer at Watermark Funds Management and was made aware of Amazon’s plans thanks to a special briefing last week from the Amazon person responsible for Australia strategy.
“It is mainly in regional areas, because enforcement is more difficult in regions than in cities.
“We spoke to the guy who was growing Amazon’s business here in Australia and in his words, ‘We’re destroying the Australian retail landscape.’
Amazon accounts for $1 of every $2 in US e-commerce sales, and its market share is growing 20 years after it was founded by Jeff Bezos.
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According to data compiled by Watermark, e-commerce is expected to reach 20 percent of US sales in 10 years, and by then Amazon will account for 10 percent of all US retail sales.
Amazon is building a technology platform specifically for the Australian market designed to integrate with its international operations, according to Watermark research.
Watermark’s understanding is that Amazon goes through its system and collects price points for everything before setting the 30 percent discount price.
A fund manager has told Amazon sees great potential in Australia because he believes the price is too high. Amazon’s motto for Australia is “Your margin is our opportunity”.
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If you have investments in retail stocks like Wesfarmers, I strongly recommend you read the full article on AFR.
Then come back to find out how I think this could be an opportunity and a challenge for small businesses and online sales in Australia.
Now you have a general idea of what to expect. Let’s take a look at some of the key ways Amazon could disrupt retail and online sales in Australia, and the reasons why you might find it the most convenient and amazing service you’ll ever sign up for.
Amazon has a data center in Australia and has hired all kinds of experienced business professionals to work in its local office. At the time of writing, there are 107 positions with various qualifications and skills in retail, networking, sales, managers, system engineers and more, reference: linkedin.
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Australia is a great market to work in, we have a country with a lot of salaried people who have homes and expenses. We spend a lot of money with Coles, Woolworths, Aldi, Harvey Norman, Office Works, JB Hifi, Bunnings and more.
In 2016, Australians spent around 20 billion online. That’s about 7% of total retail sales. reference: AFR.
Online sales are growing by more than 10% every year. It could be the case that by 2020 online sales in Australia could top 30 billion, with 1/3 of spending going through Amazon.
Amazon is known to have a high demand from Australians to buy goods from amazon.com. I think there are thousands of incomplete orders on Amazon every month from people in Australia who stop when they realize what the shipping costs are.
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Amazon has a good history of incomplete orders being placed by Australians due to shipping costs to Australia and never completing the purchase.
Getting free or cheap shipping with Amazon is pretty easy. Either you join Amazon Prime or you qualify for free because of the dollar value of the order. We can use the UK as an example of how Amazon deals with countries and territories outside the US. Reference: Amazon UK delivery fees.
Amazon is all about efficient distribution and delivery. Networks of people, robots and precision systems take warehousing to a level of productivity that other companies can only dream of. If you want to see how Amazon’s fulfillment center works, watch this video:
Amazon Prime is a great driver of repeat purchases with Amazon. Essentially, you get free expedited shipping for a reasonable annual fee, plus a few other benefits. Think about that for a moment. It may take a long time to change people’s shopping habits, but being able to order a $5 item from Amazon as many times as you want and get free shipping can change the way you think about the web.
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Personally, I already have a way of thinking about ebay. When I’m looking for items on ebay, I generally don’t consider the shipping fees I have to pay. Costs are built into the product, so it’s easy to forget those costs.
This aspect of Amazon’s service alone has the potential to cause major disruption to retail in Australia.
Expect ‘Black Friday’ and ‘CyberMonday’ sales to explode as Amazon hosts these events for Australian shoppers.
Amazon Prime membership includes several shipping benefits, including some shipping upgrades if you need to expedite shipping.
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As you can see on the UK Amazon site. Most products that are not bulky or difficult to ship are available to Amazon Prime members.
US and UK can sign up for Amazon Prime. An annual fee that covers the shipping you want. About $99 per year in the US and £79 per year in the UK.
Australia is a large country, so there may be differences between states or regions included. Maybe there will be a three-tiered price, like: $100 a year for metro, $150 a year for long distance, $250 a year for long distance, or something like that.
Regardless of the cost, they have come up with an optimal acceptable amount that covers as much as possible the expected delivery costs, but remains in the range of $10-$15/month for the majority of the population.
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It would be easy to underestimate the seismic shift that Amazon, founded in Australia, can bring about Australian e-commerce.
You may be familiar with FBA, Fulfillment by Amazon. Companies can ship their goods to Amazon, and for a reasonable fee, Amazon will warehouse, package, ship and handle returns. You can see how it works here: services.amazon.com/fulfillment-by-amazon/how-it-works.htm
There is a large industry in the US built around FBA, where manufacturers, wholesalers and resellers send truckloads of products to Amazon warehouses to be sold on Amazon.com.
The opportunity is that distribution can be done without hiring employees and stuffing the goods into boxes yourself, and you can potentially export through Amazon.
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This is a real and limiting factor that I have seen with some companies. They get stuck when they have to rent
