Local logistics companies such as Australia Post will be feeling the pressure this month, with reports forecasting that more than 45 million parcels will be delivered this December.
The findings come after the launch of Amazon Australia, which analysts state will only increase the prevalence of local online shopping.
Market commentators affirm that despite the ‘high-tech’ back end of many e-commerce sites – eg. complex algorithms, cookies etc – the biggest challenge for many online retailers surrounds physical logistics.
Recognising that accurate delivery times play a big part in customer retention, many online retailers affirm that delivery costs still make up a significant component of the overall customer purchase.
Recent reports affirm that Australians now spend about $23 billion on online retailers annually – i.e. 8% of spending.
Again, analysts speculate this figure will only accelerate with the launch of Amazon Australia.
Despite its old heritage, Australia Post remains the biggest influence on delivery for the majority of consumers.
Recent research claims that Australia Post delivers 80% of all parcels received in Australia. The government-backed entity claims to have put on an extra 2000 workers at its parcel processing facilities to help meet the load of December’s demand.
Australia Post also remains a crucial part of Amazon Australia’s strategy, following its launch last week. Australia Post forecasts it will deliver over 34 million parcels in December.
The government backed entity has taken a leaf out of Amazon’s book, and debuted ‘Shipster’ – a “subscription based” free shipping service, similar to the premium Amazon Prime Service, which offers free delivery for an annual fee of US$99.
Analysts tip that Amazon Prime will roll out to Australia mid next year.
Shipster is expected to boast 100 participating retailers by early next year. However, analysts affirm that Shipster’s subscription fee isn’t sufficient to cover fulfillment costs, speculating that the retailer and Australia Post subsidise the service.
The growth of online shopping is also transforming large scale logistic and shipping companies.
Maersk Asia Pacific Chief Executive, Robbert van Trooijen, states that the shipping group is transforming itself into a “transportation logistics business”, as it aims to meet the needs of e-commerce giants such as Amazon and Alibaba.