Amazon delivery charges and delivery times tipped to fall as it marches closer to NZ video

The US online retail behemoth confirmed Thursday it will establish the first of many fulfillment centres in Australia, in a move sure to disrupt the local market.

Amazon's New Zealand delivery charges and shipment times are expected to fall after the United States retail giant confirmed plans to set up shop in Australia.

The company founded by Jeff Bezos confirmed its intention to pursue the retail dollar in Australia in a big way, on Thursday, with significant implications for New Zealand.

Amazon is looking for its first warehouse in either Brisbane, Sydney or Melbourne to become a fulfillment centre. It will be the first of many in Australia, each with floor space of up to 93,000 square metres – the equivalent of 13 rugby fields.

Although Amazon has not discussed any plans to set up in New Zealand and there is no speculation that is imminent, Kiwi retailers are concerned by its move into Australia and what they say is an uneven playing-field.

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Amazon can sell items costing less than $400 to New Zealanders free of GST, and fulfilling orders from warehouses in Australia would shorten its supply lines to Kiwi consumers. 

A decision hasn't been made on Amazon's location but it's likely in either Brisbane, Sydney or Melbourne.
PASCAL ROSSIGNOL / REUTERS

A decision hasn't been made on Amazon's location but it's likely in either Brisbane, Sydney or Melbourne.

Retail consultant Chris Wilkinson said Amazon's move into Australia had been well sign-posted, and he believed New Zealand would be within Amazon Australia's distribution sphere. 

While Amazon Australia might not immediately stock everything it sold in the US, it would certainly mean lower delivery charges and shorter waiting times for many items for Kiwi customers, he said.

"They will move rapidly and decisively on this market." 

Retail NZ spokesman Greg Harford said Amazon's arrival in Australia would be a big issue for New Zealand firms and "put Amazon in a much stronger position especially because they won't pay tax".

"This is a further reason the Government needs to be looking at the tax issue as soon as possible."

Harford said Kiwi retailers would need to focus on top-class service and low prices to combat the threat posed by Amazon.

"New Zealand is a small market. Even the biggest firms in New Zealand lack scale and that makes price something that needs to be kept down."

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Amazon emphasised the investment and job opportunities that would flow from its move into Australia.

"We are excited to bring thousands of new jobs to Australia, millions of dollars in additional investment, and to empower small Australian businesses through Amazon Marketplace," the company said in a statement.

But the impact on existing retailers such as Myer, JB Hi-Fi and Harvey Norman is expected to be large. Credit Suisse forecasts Amazon will achieve a market share of more than 5 per cent in many parts of the Australian retail sector within five years of opening.

Amazon, dubbed the "country killer" by analysts at Morgan Stanley, reportedly told Watermark Funds Investment chief investment officer Justin Braitling: "We are going to destroy the retail environment in Australia."

But Amazon said the person who made that comment was a former employer who left the company in February, and it did not reflect Amazon's views. 

The Australian government plans to require foreign sellers to levy GST on items they ship to consumers from overseas from July – a move which removes an incentive for Amazon to instead ship products to Australians from overseas.

Retail NZ has been calling for the New Zealand government to urgently follow suit, to prevent Amazon shipping goods to New Zealanders from its Australian warehouses tax-free. 

However, Harford has acknowledged the removal of the GST advantage could encourage Amazon to build a fulfillment centre in New Zealand. 

 - Stuff

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