Amazon is one of the largest online retailers in the world. With an estimated net worth of nearly $20 billion dollars, this massive portal has changed the ways in which online shopping occurs. It is therefore understandable that the recent announcement of Amazon entering into the Australian marketplace and the intention to use Melbourne as their base for operations has turned quite a few heads. Why is this movement so important and what could it potentially mean for the average Melbourne business? Let's take a closer look at the answers to both of these questions, as the face of the retail industry could be forever transformed.
The Potential Winners
The answer to the first question, primarily depends upon the type of business. For example, it is predicted that online sellers within Melbourne will reap the greatest number of benefits. As they will soon be presented with an entirely new venue to digitally promote their items, their overall ROI should dramatically increase.
This same observation can be made for international sellers who have been looking to tap into the lucrative Australian marketplace. As they can ship their products directly to the consumer, these sellers will likely enjoy a greater amount of business. However, we should keep in mind that this relationship will partially depend upon the strength of the Australian dollar in relation with other major currencies such as the pound and the euro.
The Possible Losers
The bad news is that traditional retailers might not fare so well. When Amazon does indeed enter into the Australian marketplace, consumers may opt for cheaper goods from international sources as opposed to purchasing similar items from a local business. This is particularly the case in terms of Melbourne-based electronics firms, as Amazon has always had a strong market share within this industry. The only possible trade-off is that those businesses which are able to translate their operations into the e-commerce sector will likely enjoy success over time. Still, these predictions have yet to materialise.
The Employment Sector
Many are rightfully concerned as to whether the introduction of Amazon will bolster or deflate the job market. Robert Bruce, Amazon’s director of operations for Australia attempts to alleviate concerns stating “Over time, we will bring thousands of new jobs to Australia and millions of dollars of investment as well as opening up the opportunity for thousands of Australian businesses to sell at home and abroad through Amazon Marketplace.”
Those businesses within Melbourne (and throughout the entire country) which are able to adapt to the online retail community could very well see their businesses expand at a rapid pace.
Thanks to the new warehouse to be located in Dandenong East, local trades such as sales, customer service, HR, Operations Managers and warehouse operatives will all be in high demand.
However, the verdict is still out as to whether traditional retail businesses will be forced to downsize.
The Real Estate Impact
We should also expect to see some changes within the real estate market. As The Financial Review highlights, dropping brick-and-mortar sales may impact the number of commercial leases being renewed throughout Melbourne. However, there is a potential bright side as well. Businesses centred around the field of e-commerce could very well experience increased sales. Thus, they might require more office space to store and ship goods to the end user. This will particularly impact the Melbourne metropolitan area thanks to the looming presence of a truly gargantuan Amazon warehouse.
The entrance of this giant online retailer into the Australian marketplace will certainly shake things up a bit. However, few analysts are surprised at such a move and it only makes sense in a world increasingly defined by digital purchases. The main question is how Melbourne businesses will adapt to this shift and if they will be able to capitalise upon such a profound move into the future.