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“They will continue to pick up pace”: Amazon to open third warehouse in Perth

Amazon will open a new fulfilment centre in Perth by the end of the year to keep up with increasing demand and offer fast delivery to more customers, the e-commerce company has said.

The facility, set to go online in late 2019, is Amazon’s third warehouse in Australia. It also has warehouses in Melbourne and Sydney.

“This expansion represents the investment and development of our growth strategy in Australia, following a steady and progressive increase in customer demand,” Craig Fuller, director of operations at Amazon Australia, said in a statement.

Located in the Perth Airport Business Precinct, the new facility is expected to give customers in Western Australia access to the same delivery options as customers on the East Coast.

Amazon currently offers same-day delivery only to customers in eligible post codes in Sydney and Melbourne. It costs $9.99 for those with Prime and $12.99 for those without.

Customers in Sydney, Melbourne, Brisbane, Adelaide and Canberra can also get free expedited delivery (1-2 business days) if they have Prime, or pay $5.99 if they don’t.

But the fastest delivery option (1 business day) for customers in other metropolitan areas, including Perth and the Gold Coast, costs $9.99 – even for those with Prime. Those without currently need to pay $11.99.

“We strongly believe that this further investment will benefit both customers and the local economy and give Western Australian customers quicker delivery of high demand items,” Fuller said.

But the new facility in Perth isn’t just about enabling one-day delivery nationwide, something which few pureplay online retailers in Australia are able to do.

According to Rob Hango-Zada, co-founder and joint CEO of Shippit, a logistics platform that helps retailers find the most efficient way to send their goods, it’s also about the customer experience.

“Amazon are meticulous about control of service levels, as it has a significant impact on the customer experience and hence repeat purchase rates. This is the biggest reason why Amazon invested in its own logistics network when UPS struggled to keep up with demand in the States,” he told Inside Retail.

“This move [in Perth] signals Amazon’s discomfort in trusting carriers to maintain SLAs to customers more than it does cost reduction or meeting demand.”

Hango-Zada said Amazon has been growing steadily since launching in Australia in December 2017, and he expects the platform to hit an “exponential trajectory” as purchasing online becomes more normalised.

“They will continue to pick up pace in the local market as more offline spend in department and variety stores moves online,” he said.

“Whilst the local retail market has invested heavily into new capabilities, Amazon is a seasoned player when it comes to the fundamentals of a low cost, mass distribution model that favours speed.”

Inside Retail has contacted Amazon Australia for further comment but had not received a reply at the time of publication.

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