Amazon opens its logistics service to merchants

5 March 2018

Amazon has begun the second phase of its Australian rollout by opening its warehouse and distribution network to local merchants.

The e-commerce giant said businesses that are registered on its online marketplace could now use its Fulfilment by Amazon (FBA) service to have their products packed and shipped by Amazon on their behalf.

Under the service, sellers send their products to Amazon’s 24,000 sq m warehouse in southeast Melbourne for storage and when a customer places an order, Amazon picks, packs and ships the product. 

Though Amazon will take responsibility for meeting delivery estimates, its main delivery partner is government-run Australia Post.

Sellers will be able to offer their customers free delivery on orders above $49 and other Amazon shipping options including one-day expedited delivery, which is available in selected areas.

Amazon will also handle all customer service and returns.

Sellers using the service will have to pay a “fulfilment fee” for postage of each item, as well as a storage fee charge by the cubic metre of up to $26.50 per month. The storage fees will vary depending on the time of year businesses choose to store stock in Amazon warehouses. 

In January, Amazon reported 5,000 sellers had signed up to its marketplace place since the company’s launch in December.

Marketplace sellers currently have to pay $49.95 to use Amazon’s platform, plus a commission of between 6-15% on sales.

This is the latest push by the e-commerce giant into Australia after its launch late last year. 

Amit Mahto, head of FBA Australia, said there would be no restrictions on the size of the business that would be able to send stock to the logistics centre for picking and pricing.

“Size doesn’t matter in the digital economy and Amazon Marketplace helps to level the playing field when it comes to starting or growing a business,” he said. 

“We are focused on helping Australian businesses of all sizes succeed by investing on their behalf and making our technology available to them and FBA is a fantastic example of this.” 

The launch comes on the back of Amazon’s announcement that it has rapidly increased the amount of items on sale, with tens of millions of items now available. 

However, Gary Mortimer, retail lecturer at Queensland University of Technology, said there was no cause for traditional bricks and mortar retailers to panic.

“Amazon are slowly increasing the proportion of products available through their website, in other words they are recruiting more small businesses into their Amazon fold, which is good for small businesses that may not have a strong online platform – they can certainly use Amazon’s global reach to get their products through the Amazon system out to new markets,” he said.

“But I think despite the increased proportion of products available, we must remember that’s coming off a low base after just entering the market.”

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