The impact of Amazon on Australia




December 05 2017
The impact of Amazon on Australia

Much has been made of how Amazon will affect the retail sector in Australia. Both consumers and businesses predict it will have ongoing consequences, with consumers set to enjoy more competitive prices, while established retail giants are predicting the end of the sector as we know it. However, Amazon is an enormous company, with tentacles reaching into dozens of countries around the world, so it is not just JB HiFi and Gerry Harvey in for a shake-up.

The job market

Much has been said about Amazon killing jobs in Australia, but this isn’t true elsewhere in the world. In fact, Amazon employs more than half a million people around the globe. In the last year alone, Amazon has boosted its workforce by more than 250,000. In the US, Amazon has 70 fulfillment centres, employing 90,000 people. Currently in Australia they have just one centre, with plans to create more, opening the doors for hundreds, possibly thousands, of people to find work around the country. This doesn’t even account for the required corporate structures, such as customer service and business development, which will again create new opportunities.

The real test for the job market will be how well the large retailers adapt to a new competitor. Employee cutbacks are more likely an indicator of a business’s failure to evolve and face the new challenge, rather than any fault of Amazon. That’s not to say Amazon is an angel, but as it stands they are a company bringing in new opportunities and it is up to the rest of the sector to be competitive. Any job losses sustained by JB HiFi, Harvey Norman and the other big box retailers, will be the result of the sector’s stagnation and the big hitters’ complacency when it comes to their customers.

Shipping infrastructure

In the US, eCommerce is a $360 billion industry, with Amazon a major player in driving its success and accounting for almost a third of that figure. Online shopping is big business in Australia too, with approximately $30 billion in sales across the industry, however it is Dan Murphy’s, not one of the eTailers, taking the biggest share. Why is this? A major factor is that Dan Murphy’s do their own deliveries.

With Amazon hitting these shores, it will soon discover the problem that holds back eCommerce in this country – Australia Post. Everyone has at some point encountered the unreliable mess that is the national postal carrier and social media is a constant stream of negative publicity for them. In the US, Amazon has driven growth across the logistics industry, with demand pushing carriers to get bigger and better. Subsequently, in a country larger than Australia, Amazon is able to guarantee expedited delivery to the furthest reaches of the United States.

For Australians, this would mean the destruction of the status quo. Once Amazon identifies the least reliable parts of its delivery chain, there will be a paradigm shift in parcel delivery in Australia. Australia Post should be more worried than any business in the country.

The environment

Unfortunately, it isn’t all good news for the Australian consumer. All those deliveries, from the smallest lipstick to the biggest flat screen tv, are packed like they’re being sent to the moon and back. Acres of bubble wrap, forests of cardboard boxes, and litre after litre of fuel. The impact of the retail obsession is felt most keenly by the environment, with plastic waste being found in everything from the food we eat and the stomachs of wildlife, to the floating disaster in the middle of the Pacific Ocean. If Amazon wants to be a true pioneer, not just another opportunistic multi-national, it will need to devise a plan for environmental sustainability to complement the other revolutions it is set to begin.