Amazon is coming to Australia. The strong rumour is the giant American e-retailer has chosen western Sydney to be its base. Good news aye?
I’m sure there will be bells, whistles and smiling politicians at the opening, which is tipped for later this year.
And like most announcements about a new arrival there will be wild claims about the number of new jobs to be created.
The hot tip is that Amazon will occupy a giant warehouse at Eastern Creek - the size of 10 football fields – with access to the M4 and the M7. It will be Australia’s first Amazon Fulfillment Centre.
Amazon runs more than 100 of these centres in the US. Some employ a thousand workers.
Each Fulfillment Centre is a giant robot. Inside the robot are complex, highly controlled components.
The robot is fed at multiple unloading docks with barcoded goods that find their way to special slots within a massive maze of shelving.
Then the robot’s pickers – actual people – fill orders from the shelves and feed them onto conveyors for passage to more actual people – the packers – who box and label the orders so trucks can whisk them away to customers, you and me.
But the clever, quick way Amazon dispatches orders is only one side of the Amazon strategy. The other side is the way Amazon entices producers and suppliers to sell on-line rather than through actual stores in malls or on our high streets.
When suppliers sign on to Amazon either they handle their own deliveries once orders are received by Amazon on-line or they simply deliver stock to the Fulfillment Centre and let Amazon handle the lot. This is a massive change to the way retailing takes place in Australia. Geeks call it disruption.
Being picked by Amazon to host the nation’s first Fulfillment Centre is a big deal for western Sydney, although we shouldn’t be surprised.
Contrary to a fair whack of outsider opinion, western Sydney is typical of Australian middle-class society. The region isn’t short of a quid.
And it is young and growing, which means not just big shopping trolleys full of groceries but also big houses to fill with furniture and electronic goods, and packs of teenagers eager for the latest clothing, sporting goods and cosmetics – which means our shopping malls are packed every Thursday night.
Amazon says retailing needn’t be like this. Take away the costs of building the mall, take away the lavish department stores at either end of the mall, take away the costs of undercover parking, air-conditioning, security and so on, and prices for just about everything can fall dramatically.
Analysts say by removing the costs of selling from actual stores Amazon can sell the same products 30 per cent cheaper.
Will you sign on to Amazon Prime if prices are that much cheaper, with your orders delivered to your door or to a convenient package pick-up centre nearby? Might you even buy your groceries and fresh meat, fruit and vegetables through Amazon if it decides to roll out its Amazon Fresh range?
There is a downside for western Sydney from Amazon’s arrival, of course. For Amazon to be successful, a substantial number of retailing jobs has to disappear, no? Currently there are more than 100,000 retailing jobs in our region. Throw in wholesale, transport and warehousing jobs and the number climbs to 200,000.
Importantly, these jobs are not only for the experienced and the highly trained, they include basic jobs for those not fortunate enough to have degrees and diplomas hanging off their walls.
And laid-off retail workers won’t all get jobs at the Fulfillment Centre, will they? The future of retailing – the Amazon robot – is rolling down the M4. We’re about to see it from up close very soon. But are we ready to deal with the changes it will bring?
Professor Phillip O’Neill , director
Centre for Western Sydney
Western Sydney University