‘Free and fast’: Amazon takes on Australia Post with one-day deliveries in key regional cities

Small businesses and impatient online shoppers are set to reap the benefits as Amazon expands its one-day delivery service to Brisbane and key regional centres, taking on a market dominated by the more expensive Express Post.

Amazon Flex delivery driver Phil Rock and Nakie owners Dean and Tegan Leibbrandt. Picture: Nigel Hallett

Amazon has expanded its Prime one-day delivery service to Brisbane and key regional centres across the country as part of a multi-billion dollar investment to increase its capacity and dominance in Australia.

The one-day delivery service – which is free with a Prime subscription – is now also available in Geelong, Gosford, Newcastle and Wollongong. Previously, residents in these areas would need to pay for Express Post for next day deliveries.

It comes after Amazon increased its delivery capacity by almost 50 per cent last year after spending more than $5bn on its Australian network in 2022. This lifted the tech titan’s total investment in Australia to $15bn.

Amazon Australia general manager Matthew Benham said the company is also looking to expand its one day delivery service to Adelaide once a new fulfilment centre at Craigieburn in Melbourne’s north is completed later next year.

It can already deliver to about 80 per cent of Australians within 12 hours from its Sydney centre. But having more sites spread over the country enables more efficient delivery and helps mitigate any risks of not being able to provide that one-day promise to Prime customers.

“The ability to build the fulfilment centres and the delivery stations closer to where customers … enables us to be able to get products closer to customers, which improves the efficiency and means that we can get the products to them faster,” Mr Benham said.

Amazon Australia general manager Mathew Benham

“We can access the majority of the eastern seaboard from the fulfilment centre here in Sydney and then come sort of the end of 2025, once we’ve got Craigieburn up and running, we’ll be able to fulfil the needs there and push into Adelaide and other areas, which again is exciting for us as we continue to look at it expanding and improving the speed for our customers.”

It’s a model that Amazon has adopted in the US, but Australia’s smaller population that is scattered over a large landmass has presented challenges to logistic providers, particularly in so-called last mile delivery, which Australia Post has traditionally had a monopoly on.

But Amazon has been chipping away at the national postal carrier’s market share. It has been steadily building its own delivery network since it launched in Australia seven years ago.

While it contracts other delivery providers, including Australia Post, it has also tapped into the gig economy, creating Amazon Flex, to ensure customers not only get their parcels fast but also in the evenings and on weekends.

But rather than pay drivers per parcel - like others who have dabbled in the gig economy has done - Amazon pays people in blocks of hours that they choose to work.

“We work with a variety of delivery partners and the flex model and the flex partners are one part of that,” Mr Benham said.

“We’ve been really pleased with the adoption that we have seen for flex drivers to be able to support that next day delivery experience for us.”

Amazon prime costs $9.99 a month, and in addition to free shipping on eligible products and one-day delivery in selected areas, it also includes Amazon Prime Video streaming.

Mr Benham said the combination of streaming and delivery services has created more value for customers, helping insulate the company from a slowing economy.

Amazon Flex delivery driver Phil Rock and Nakie owners Dean and Tegan Leibbrandt in Brisbane. Picture: Nigel Hallett

“We’ve continued to see Prime membership grow in Australia and it has worldwide. We know that they’re really conscious on what they’re spending and that low prices are really important. But to be able to bundle baskets together to be able to focus on everyday essentials has been really important for customers.”

The expanded one-day delivery service has also been welcomed by online retailers who sell via Amazon.

Dean Leibbrandt, co-founder of Brisbane-based ‘Nakie’, said he hoped it would boost sales of his company’s hammocks and other camping goods. “It’s going to help us as a small businesses,” he said. “We’ve got so many customers that call us and send us emails that they have a birthday the following day or it might be a Thursday night and they need our product to go camping or to the beach for the weekend.”

Amazon’s global profit soared to $US10.6bn in the three months through December - its strongest level in two years. This compares with $US278m in the same quarter the previous year. Revenue, meanwhile, rose 14 per cent to $US170bn.

The company last week also forecast continued growth in the current quarter, thanks to deepening its expansion into artificial intelligence, which it said was bolstering sales in its cloud-computing arm.