Online boom drives Amazon’s Melbourne expansion

The latest NAB Online Index estimates Australians spent $54.23 billion on online retail, over the 12 months to January, equating to 14.7 per cent of total retail sales. This is up from 9.2 per cent of total sales in January 2020, when annual online sales totalled $30.8 billion.

Australia’s take-up of online shopping lags other developed economies such as the United Kingdom, where online accounts for about 29 per cent of all retail sales.

Since launching its Australian business Amazone.com.au four years ago, its local revenues have risen strongly, doubling to more than $1 billion in 2020.

The most recent accounts filed by Amazon Commercial Services show revenues almost doubled again in 2021 to $1.8 billion. Globally, Amazon’s sales have increased 67 per cent during the pandemic, hitting US$470 billion ($637 billion). Founder Jeff Bezos is the world’s second-richest person behind Tesla founder Elon Musk.

Craig Fuller, director of operations at Amazon Australia, told AFR Weekend that not only had its revenues accelerated during the pandemic, but its customer base had broadened beyond its traditional “more educated” online-savvy shoppers.

“My 84-year-old dad is now shopping online,” Mr Fuller said.

The construction of Amazon’s fifth warehouse in Melbourne, and its first sorting centre in Australia, follows Goodman Group delivering the online giant’s $500 million robotics fulfilment centre in Western Sydney late last year.

The largest warehouse in Australia, with its 200,000 sq m footprint equal in area to 24 rugby league fields, the expansion by the world’s leading e-commerce operator is part of a broader drive by retailers looking to get goods quickly and more efficiently to customers.

The online boom has also benefited Australia’s most successful global property company Goodman Group, which counts Amazon as its biggest customer.

The majority of Goodman Group’s $70 billion of assets under management and $13 billion development pipeline is being driven by growing e-commerce demand in the major urban centres around the world.

Goodman Group chief executive Greg Goodman said online sales would account for 25 per cent of all retail sales by 2026.

The Craigieburn Sort Centre is Amazon’s fifth operations site in Melbourne, supporting the company’s existing fulfilment and logistics network in Victoria which includes fulfilment centres in Dandenong South and Ravenhall, and Amazon Logistics sites in Tullamarine and Mulgrave.

The new Craigieburn facility will employ 200 people and create 700 construction jobs.

Amazon.com.au launched in Australia in December 2017 and says it now offers customers 125 million products across 31 different categories including Amazon devices.