Amazon is in talks with almost 20 per cent of Australian food and grocery suppliers, confirming that the e-commerce giant is preparing to take on Coles and Woolworths in the $3 billion online grocery market.

According to a survey of suppliers by investment bank UBS, about 23 per cent of packaged food suppliers and 29 per cent of non-food grocery suppliers have been in contact with Amazon, which last month confirmed plans to roll out its full retail offering in the next few years.