Amazon will build its second Australian robotic-run warehouse in Melbourne

A new Amazon warehouse in Melbourne utilising robots and creating 2000 jobs will cover an area equivalent in size to 11 MCGs.

Retail behemoth Amazon will construct a new “fulfilment centre” in Melbourne run by advanced robotics, taking its total investment in Australia to date to $8.4bn.

Targeting completion in 2025, the site at the AustralianSuper-owned Craigieburn Logistics Estate, in Craigieburn, northern Melbourne, will house up to 25 million of the smaller items which are sold on local platform Amazon.com.au.

The centre will cover about 209,000 sqm over four levels which is the equivalent to 11 MCGs, or five times the size of Melbourne’s Federation Square, making it the largest warehouse ever built in Australia.

Melbourne’s facility will be larger than Amazon’s western Sydney robotic site by 9000 sqm.

It will be Amazon’s seventh facility here and follows the successful launch of Amazon Australia’s first robotic site in western Sydney in 2022, which doubled the company’s local operational footprint.

It is expected to create about 2000 local jobs once fully operational and will take its staff size in Australia to about 9000.

The latest investment underlines the growing threat Amazon has posed to Australian retailers since the US giant set up here in 2017. It now offers more than 200 million products across 31 categories with a growing legion of Australians also signed up to its Amazon Prime delivery and streaming service.

Amazon Australia chief executive Janet Menzies.

In May, Jarden analyst Ben Gilbert said investors were underestimating the impact the US online retail giant was having in Australia and that the retailing juggernaut would grow its market volumes here to more than $5bn by 2024. Jarden pointed to data showing Amazon’s volumes would be close to $5bn in 2023, up 25 per cent, and rise to more than $5.5bn by 2024.

Mr Gilbert expected Amazon’s growing digital presence, same-day delivery pledge and the rising penetration of its Amazon Prime platform to drain rival retailers of customers, sales and ultimately profits.

The construction of Amazon’s second robotic fulfilment centre in Australia will increase its speed and service. The site will be equipped with advanced Amazon robotics technology to better assist employees who work alongside it and serve customers.

Amazon Australia country manager Janet Menzies said the investment highlighted the importance of the Australian market to the US company.

“We are making a significant investment in Victoria. It really says that Australia is a very important market for Amazon and we’re really buoyed by the consumer reaction to our offer. Just very excited about the opportunity this will create for new jobs,” Ms Menzies said.

“This will help the small businesses that are so much an important part of our offer, and also what this will mean, of course, for customers.”

Ms Menzies said when the new Melbourne robotic fulfilment centre was completed it would be the largest warehouse in the southern hemisphere.

She said despite the tougher economic conditions driven by rising interest rates and rents as well as other cost-of-living pressures, Amazon shoppers were reacting positively and the online marketplace was growing.

“We really are proud of how customers are reacting to the offering. You know, for us, it’s all about having a really wide selection that’s underpinned by the small businesses that are on the site,” she said.

“It’s about competitive pricing. It’s about fast delivery. And so for us we are very optimistic about Australia; we’ve doubled our operational footprint since the start of last year and so for us this is really about continuing to invest to make sure we have the fulfilment network that can serve our customers.”

Ms Menzies said “Prime Day” in July was the biggest sales day it had ever had in Australia.

“That is an important signal from customers that they are responding well to the offer,” she said.

Amazon has almost doubled its sales in Australia in the past few years. It is quickly racing to annual revenues of $3bn as a sharp trading rebound following the Covid-19 pandemic and a boost in popularity for its subscription service Amazon Prime.

Accounts lodged by Amazon Commercial Services, the global corporation’s key business arm in Australia, show that for calendar 2022 Amazon had revenue of $2.629bn, up from $1.75bn in 2021.