Amazon in Australia – Retail Disruption and the Future of Shopping

In 2017, we explored how the Australian retail landscape was changing.

Now in 2018, the conversation has shifted to the impact of Amazon’s arrival in Australia and how pure online plays will reshape retail.

Amazon’s Arrival in Australia

• Amazon announced its first distribution centre in Dandenong South, VIC.

• Recruitment began, sparking speculation about how local retailers would respond.

• Major players like Aldi, Woolworths, and Wesfarmers created “war rooms” to test store layouts and strategies.

• Retailers are working to become “Amazon‑proof” by focusing on customer experience and differentiation.

Which Retail Categories Are Most at Risk?

Industry analysts disagree, but categories most likely to feel Amazon’s impact include:

• Consumer electronics

• Toys and entertainment

• Books and media

The most immediate disruption, however, will be in logistics and delivery speed.

Logistics – Amazon’s Biggest Advantage

Australian parcel logistics has long been plagued by:

• Slow and expensive delivery.

• Poor customer service and indifference from freight providers.

• “Take it or leave it” attitudes toward merchants - especially the almost monopoly position enjoyed by Australia Post.

Amazon plans to:

• Build an intelligent distribution network.

• Use best‑point sourcing for rapid fulfilment.

• Hire local drivers to bypass traditional freight inefficiencies.

This could transform delivery expectations in Australia, forcing logistics companies to improve or risk irrelevance.

Shopping Centres vs Online Retail

Shopping centres are attempting to Amazon‑proof themselves by focusing on lifestyle experiences:

• Adding food courts, cafés, hairdressers, cinemas, and internet services.

• Using tenant turnover data to justify category expansion.

But challenges remain:

• Food operators face overcrowding, with 20%+ more outlets competing for the same foot traffic.

• Franchise brands are exiting shopping centres or renegotiating leases.

• Anchor tenants like Myer and David Jones are downsizing, leaving gaps in malls.

• Some Shopping Centre operators even demand a cut of online sales from tenants, a practice that deters innovation.

Suburban Retail Struggles

• New estates with limited amenities still attract large shopping complexes.

• Established suburban strips face rising rents and reduced parking.

• Many redevelop into apartments with token retail spaces at ground level.

Long‑Term Outlook

• Amazon and other online giants will take time to materially disrupt Australian retail, but the changes will be lasting.

• Shopping centres will continue to evolve, but their dominance is under threat.

• The best strategy for retailers is to:

  • Focus on customer experience.

  • Manage costs astutely.

  • Adapt logistics and delivery models to meet rising expectations.

Final Thoughts

Amazon’s arrival in Australia is not just about cheaper prices—it’s about logistics, customer experience, and retail transformation.

Shopping centres and traditional retailers must adapt quickly, or risk being left behind in a market where convenience, speed, and value drive consumer choice.