Amazon looms large over Australian shipping

Just three months after launching its first warehousing service Down Under, Amazon is taking its shipping efforts to another level. This year Amazon has begun an in-house delivery service available to Australian third-party vendors. In doing so the retail giant takes on a major logistical challenge and also reveals its intention to dominate delivery channels throughout Australia.

Fulfilment by Amazon (FBA) is already well underway, so how does it work exactly and what are the implications for Australia’s shipping industry?

Fulfilment by Amazon: how does it work?

Known as FBA, Amazon’s third-party delivery system opens up the online retailer’s own shipping service to vendors who are already using the site to sell their products. The service offers:

• Product storage
• Shipping
• Handling of customer returns

Third parties using the service must set up an online account and then pay regular fees to Amazon. They must also adhere to thresholds that determine minimum amounts of products that must be stored at all times. Amazon’s new service stores and delivers third-party products.

Though the service is expensive, for retailers lacking the manpower or supply chain network to manage their own shipping, it is an extremely easy-to-use service.

What is the impact on Australian shipping?

In March Amazon reported that its FBA platform had received its 10,000th third-party seller, a dramatic rise from the mere 5,000 it had at the end of January. Clearly, this is a platform that’s getting a lot of business. However, as with many aspects of the online giant’s arrival in Australia, the true impact remains to be seen. The level of Amazon’s success will depend on tackling two big factors:

• Australia itself poses very definite challenges as an area of distribution. Unlike the home market in the US where the bulk of deliveries can be made to cities, Australia has a very dispersed population with a significant number of Outback shoppers living a day or more journey from the nearest town hub.
• Australia’s complex and stringent biosecurity laws are a challenge for any new company. Amazon needs to make sure they are following national shipping protocols, using properly treated products and biosecure logistics equipment.

The best way to compete

The best way to compete with Amazon’s increasing shipping offerings is to make improvements to your own delivery service. At Eco Pallets, we can provide supply chain and shipping expertise tailored to a variety of industries, including pharmaceutical and food products. Our range of sustainable, durable and hygienic plastic pallets and bulk containers enable efficient shipping throughout Australia.

For more information on how Eco Pallets can improve your shipping contact the team today.