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Amazon Undergoing Major Expansion, New Warehouse, New Categories

Amazon who has delivered a record period of growth during COVID-19 is looking to expand their Australian operations with new product categories, and the building out of new warehouse capabilities one which is the equivalent of 27 football fields – across multiple floors, in Victoria and New South Wales.

The move to “significantly” expand their operation comes as Australian consumers take to online purchasing with some analysts predicting that Australia is “suddenly catching up with Europe and the USA”.

One area where Amazon could expand their operation is food claims observers.

A May report by Deloitte Access Economics found reduced access to bricks-and-mortar stores had lifted online retail from 7.1 per cent in March to 10 per cent by April.

While Deloitte said this rate of growth was not expected to continue once restrictions eased and health concerns were alleviated, it said “COVID-19 would have convinced parts of the population that online purchases and delivery services are a viable option and, at times, more efficient, accelerating the longer-term trend already seen towards online shopping.”

Despite a rushed entry into the Australian market, the Amazon business has over the past 18 months matured and is now a serious player according to one competitor.

Amazon, which announced plans for a new Brisbane warehouse two weeks ago in Goodman Group’s Port Industry Park, is understood to have partnered again with Goodman on a multi-level fulfilment centre at its Oakdale West Estate in Kemps Creek, which was approved in April.

The Australian Financial Review reported recently that It’s growth (Amazon) which will likely be accelerated by COVID-19, has forced other retailers – both bricks-and-mortar and pure-play online retailers – to step up investment in digital and e-commerce operations.

Woolworths this week unveiling plans to invest $800 million in state-of-the-art warehouses in Sydney.

While both Amazon and Goodman declined to comment, multiple industry sources said the online retailer was the natural occupant of building 2B which would have almost 190,000sq m of lettable area.

Sources have also confirmed Amazon was seeking up to 80,000sq m of warehouse space in Melbourne.

Currently Amazon is operating from a 24,000sq m property in Dandenong Victoria, in the city’s south east, in 2017.

Amazon’s Australian online store almost doubled its revenue in 2019 to $562 million from $292 million in 2018.

These revenue numbers are likely to surge even higher this year as Amazon and others benefits from rising online sales due to COVID-19, the US retailer has also expanded into new categories with more categories including an expansion of their food operation being planned.

“As people shop less in stores there will be less space dedicated to traditional retail shopping centres but, on the flipside, more space dedicated to centralised distribution centres,” said Jonathan Reeve, an online retail expert and general manager of digital marketing platform Eagle Eye ANZ told the AFR.

“You need one or two of these centres in the big cities to service the needs of their populations.

“Amazon started here very late but with the model they have developed in other countries, they can grow very quickly.”

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