Amazon puts launch into second gear; will store and ship for sellers
By Patrick Hatch
Updated February 27, 2018 — 6.24am first published at 6.00am
Amazon is unleashing the second phase of its assault on Australia's retail sector, opening its warehouse and distribution network up to local third-party businesses so they can tap into its logistics prowess.
The American e-commerce giant on Tuesday will launch its Fulfilment by Amazon (FBA) service, allowing Australian companies to store products at its 24,000-square-metre warehouse in Dandenong South, south-east of Melbourne, and have their orders packed and shipped by Amazon.
An Amazon warehouse in Germany. The company's Australian warehouse will soon house third-party sellers' goods.
For customers, that means orders over $49 will qualify for free shipping and Amazon's one-day delivery option, and will also be included in services offered in its Prime subscription service, which in the US includes free next-day delivery.
Amazon plans to launch Prime in Australia by the middle of this year.
AmitMahto, head of FBA in Australia, said the service helped level the playing field between large and small businesses, which might not have the scale to build their own logistics network.
"We are focused on helping Australian businesses of all sizes succeed by inventing on their behalf and making our technology available to them," Mr Mahto said.
'Focus on what you're good at'
Australian camera lense start-up Gobe started selling products on Amazon in 2015 and has used Fulfilment by Amazon to sell its products in the United States and Europe, helping propel sales to about $450,000 a month.
"We haven't had to invest in any warehousing; we basically just handball all that over to FBA, from storage, to pick and pack, to the logistics of getting product to the warehouse out to customers," said founder Christian Gibson, adding that Gobe would also use the service in Australia.
"Which is amazing because as a small business you just want to be focusing on the things you're good at... and picking and packing orders isn't one of those things."
A recent analysis of Amazon's Australian website found the number of products being sold hit half a million in January, after doubling from December 14 to January 4.
Amazon's local head Rocco Breauniger was spruiking FBA at a "sellers summit" in Sydney in November. Credit:Tony Wagener
About a third of products for sales are electronics, the biggest category, followed by toys making up 14 per cent, and home and kitchen ware accounting for 9.5 per cent, analytics firm Ugam found.
Third-party sellers account for about half of all Amazon sales globally.
Amazon will charge third-party sellers from $1.76 to fulfil an order that fits in a small envelope and up to $25.48 for a bulky order weighing up to 30 kilograms.
It will charge $7.76 to pack and send an order weighing up to three kilograms. Australia Post charges $8.50 to send a parcel that size anywhere in Australia.
Storage will be charged at $19.40 per cubic metre for the most of the year, and $26.50 per square metre in the busy Christmas shopping months from October to December.
Australian businesses pay a monthly fee of $49.95 to sell their products on Amazon, which also takes a cut of sales between 6 per cent and 15 per cent, depending on the product category.
Amazon launched with both its Marketplace and its first-party offer in early December.
Patrick Hatch
Reporter for The Age
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