Amazon Faces Tough Entrance To Australian Market

Amazon’s value proposition combined with its need for immense space may make it difficult to find a suitable base within Sydney, according to a new report from Colliers International.

The Colliers Report analysed Amazon’s strategic footprint in the global arena to determine how the online giant would make their mark on the Sydney industrial market.

The report showed that due to the sheer volume required by Amazon, combined with their need to deliver produce within an extremely short time frame, that they may struggle to find a space that meets their needs within the inner-Sydney ring.

"Amazon’s value proposition lies in its ability to offer an extensive range of consumer products at low prices by providing a unique customer experience which is dependent on delivering goods with speed, elasticity and mobility,’ Colliers International Research Manager Sass J-Baleh said.

"To fulfil their value proposition, Amazon’s key activity boils down to its logistics and distribution process – it requires a sufficient supply chain management.

"This means Amazon’s key resource is its Transit Warehouses/ Fulfilment centres, which typically occupy 100,000 square metres of space.”

Colliers report found that Amazon’s Fulfilment Centres (FCs), which is where a large majority of the goods are packed and distributed, are typically 100,000 square metres, with an overall global average of 64,000 square metres.

The company also relies on Fresh Food Distribution Centres, Regional Sortation Centres, Delivery Stations and Prime Now Hubs which typically occupy an average of 40,000 square metres, 30,000 square metres, 10,000 square metres and 6,000 square metres respectively.

Amazon currently operates in 14 countries and has 393 active facilities with a combined facility space of 13 million square metres.

The Colliers International Report drew parallels to certain countries throughout the world which may reflect how the retail giant will operate when it comes down under.

“Canada is a country with a population greater than that of Australia, and they have only established six facilities with the population distribution concentrated into a small number of cities,” Ms J-Baleh said.

“We already know that Amazon has recently secured one of its purpose-built FCs at Eastern Creek within Sydney’s Outer West sub-market, that is around 100,000 square metres.

“This is advantageous as it is adjacent to the Sydney Orbital Network, providing direct access to a large share of the NSW market.

“However, with over 64% of the total NSW population currently concentrated within the Sydney Metropolitan area, Amazon may struggle to find facilities which will allow them to adhere to their 1-2 hour delivery time within this area," she said.