What Amazon will mean for Australian SMEs

With Amazon unveiling the location of its first Australian distribution centre, the impending arrival of this retail giant has implications not just for retailers but a wide range of SME businesses.

The company — which is feared by many Australian retailers as a major commercial threat — says it will immediately start recruiting staff to the 24,000 square metre warehouse at Dandenong South, in Melbourne's south-east.

"This is just the start," Amazon's director of operations for Australia, Robert Bruce, said in a statement.

In 2015 Amazon held a 36.1% market share on all online spending during the U.S "Cyber Monday" deal period which would have equalled approx. $700,000 USD. The next highest share in sales was the retail giant Best Buy with just a 5.5% share of the sales.

Their dominance over the U.S market isn't just in online specials either. 39% of all Online groceries sales where made through Amazon.

The boss of the Australian Retailers Association, Russell Zimmerman, played down the threat saying traders had been planning for Amazon's arrival.

“Australians made 90 million more trips to physical stores in 2015-16 than the year prior. This is because bricks and mortar stores have some advantages over online retail that online retailers can never replicate,” says Adam Joy, chief executive officer of the Australian Lottery and Newsagents’ Association (ALNA).

He suggests SMEs, particularly retailers, should be “adapting and offering a seamless retail experience between their own website, social media, external websites, and even apps, that tie in with their bricks and mortar retail offering. Just because a newsagent runs a physical store, it shouldn’t mean that they do not have an online presence.”

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