By Heejae Park, Research Intern, East-West Center in Washington D.C. He is an Asan Washington Fellow with the Asan Academy in Seoul.
Note: this article originally appeared in the East-West Center’s Asia Matters for America/America Matters for Asia initiative on September 6, 2017.
On August 4, United States-based e-commerce conglomerate Amazon officially announced that its newest warehouse would be located in the south-east of Melbourne, Australia. The proposed warehouse is a 258,300 square feet wide center able to stock thousands of products which will soon be available for delivery to customers all across Australia. According to Robert Bruce, the director of operations in Amazon Australia, it will create hundreds of jobs for Australians, and draw investment from Australian businesses.
Melbourne — the second-most populous city in Oceania — was the most attractive for Amazon. Melbourne Airport is the second busiest in Australia, and the Port of Melbourne is the busiest seaport for containerized and general cargo. Also, it has Australia’s most extensive freeway network and the world’s largest urban tram network.
Australia — one of the top ten e-commerce markets globally — is strategically important for both Amazon and other US e-commerce companies. The country’s total e-commerce sales grew by 9%last year and is forecast to reach $32 billion in 2017. Additionally the B2C e-commerce growth rate increased considerably from $15 billion in 2012 to $24 billion in 2016. The B2C e-commerce is that online transactions service conducted directly between a company and consumers. The business to consumer(B2C) differs from the business to business model(B2B), which refers to commerce between two or more companies. Retail e-commerce in Australia has outgrown the existing financial and telecomunication infrastructure. According to Morgan Stanley, the current sales of Amazon in Australia amount to around $1 billion through overseas shipment. Amazon plans to bring its Australian website expected to generate revenues of nearly $170 billion — online by the end of 2018.
More than 300,000 US Jobs are directly or indirectly supported by exports to Australia. Victoria, in which Melbourne is located, is the second largest total exporter to the United States among Australian territories. The Volume of exports from Victoria to the United States is about $9 billion, having doubled over last five years.
Victorian Industry Minister Wade Noonan stated that Amazon’s decision to locate its center in Dandenong South would create hundreds of local jobs and open up retail opportunities for thousands of local business. Wade Noonans, Victoria Industry Minister, stated that the Amazon in Melbourne will create a huge investment opportunities for the local economy.