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Amazon signals eCommerce strength in Australia

Categories: Commercial, Retail

Amazon is here to stay and here to force bricks and mortar retailers to think how they will ensure the same.

Amazon will push along their vigorous growth strategy by opening its second Australian fulfilment centre in Sydney later this year. In an evolving retail environment, which sees some traditional bricks and mortar stores resort either to e-commerce or liquidation, this monumental move is likely to begin a shake-up of the Australian retail industry.

The giant online retailer will lease a purpose-built 43,000sqm warehouse in the industrial suburb of Moorebank. Its Australian presence was established in only December last year with a 24,000sqm warehouse built in Dandenong South.

The announcement this month comes as domestic retailer Esprit exits its operations in Australian and New Zealand. While it is suggested Esprit’s sales decline was owed to the label’s fashion being ‘off-trend’, it is another scalp claimed in digitising Australian retail conditions.

The Australian expansion of the US-based e-commerce business is a clear signal to traditional retailers that the rules are changing. Thanks to its most recent expansion, Amazon is a retailer Australia cannot neglect.

e-Fulfilment Centres (eFC’s)

Amazon fulfilment centres (under the renowned international program Fulfilment by Amazon) work as hubs for the products of registered Amazon Sellers. The product is stored and is then picked, packed and shipped to customers in the specific continent, country or region. America alone has over 70 of these fulfilment centres (Europe has 31), with this warehouse network being the catalyst for a bolstering online giant.

Such enormous numbers of distribution outlets across the globe may signal that online retail growth goes hand in hand with the growing number of fulfilment centres.

With the announced bedding of Australia’s distribution network, Amazon Australia’s operations director Robert Bruce promotes the growth strategy as a result of steady and progressive increases in consumer demand.

“This investment will benefit both customers and the local economy by generating new jobs and providing small and medium sized Australian businesses, who sell on and use our Fulfilment by Amazon program, with an opportunity to more easily access millions of customers across the country,” Bruce says.

It is unknown who will distribute the goods from Amazon’s new fulfilment centre. Whether UPS or even Australia Post will be given the task is currently unrevealed, amid speculation that the e-commerce powerhouse may even create their own in-house delivery service.

Today’s Customer Needs

Amazon’s continued success does not only reinforce the obvious impact of online retail in Australia. It adds to the fact that the 24-year old business boasts a strong understanding of its consumer’s demands.

Staying in touch with customers is a trait seemingly lost among many Australian retailers.  Mentioned already is the inability of Esprit to keep up with fashion trends in Australia, which assisted in the demise of its Australian and New Zealand operations. Voluntary administration has become a popular headline, owed to businesses such as Maggie T, NQR, and the parent company of Outdoor Furniture Specialists failing to stay afloat in a sea of digital retail competitors.

It creates a difficult environment for some of these traditional retailers, who use Amazon to distribute their own goods while conversely competing with the online titan.

Amazon is here to stay and here to force bricks and mortar retailers to think how they will ensure the same.

We’ll keep an eye on Amazon as they continue to grow their presence in Australia. 

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