Amazon, the world’s largest online retailer, is “actively looking” for a warehouse to start operations in Australia.
According to Bloomberg, one analyst believes Amazon may start selling everything from non-perishable groceries to books and electronics in Australia by the end of 2017, with Amazon Prime launching in Sydney, Melbourne and Brisbane.
In anticipation of a price war, analysts have also almost halved profit forecasts for local electronics chains such as Harvey Norman Holdings Ltd. and JB Hi-Fi Ltd.
But Amazon faces unprecedented challenges in Australia, a nation almost as large as the U.S. but home to just 24 million people. Major population pockets can be 4,000 kilometers (2,500 miles) apart, driving up the cost of fast deliveries.
In addition, wages are higher than in most major developed nations and research shows that online shopping is at least twice as popular in countries like South Korea, China and the U.K. than in the land down under. There’s also a large quantity of red tape — it’s easier to do business in Macedonia, according to rankings by the World Bank.
However, Amazon will not be deterred. With operations in India and Australia, the Seattle-based company will have key shipping hubs and inventory supplies from which it can serve Southeast Asia and wants to add Australia to its list of international locations.
“Amazon’s ultimate ambition is to have the presence it has in the U.S. everywhere in the world,” said James Wang, an internet analyst at New York-based ARK Invest. “They’re operating on a very long timeline, and Australia is another square on the chess board.”
And Amazon Prime will change the way Australians shop, said George Freney, Sydney-based chief executive officer and cofounder of Booodl Pty, a startup that connects shoppers with local stores.
“If you talk to an American who’s recently moved to Australia and ask them what they miss most, it certainly ain’t going to be the politics or the beer,” he said. “Most of them will say Amazon.”