Inside Amazon Australia’s first sort centre

Amazon Australia will open its first dedicated sort centre in Craigieburn, Melbourne, in time for the busy festive season as the demand for last mile logistics properties grows.

The 15,600sqm site in Melbourne’s north will create 200 local jobs in addition to the 2000 seasonal workers the online retail giant plans to hire to fulfil its Christmas orders. Sort centres act as Amazon’s last-mile logistics facilities for items that have already been picked and packed at other Amazon fulfilment centres.

Currently the demand for last mile logistics sites in Australia outstrips supply according to PropTrack economist Anne Flaherty.

“The issue is that there’s more demand than supply for these kinds of properties,” she said.

“We’ve seen a rapid shift in the way consumers shop and the supply of last-mile logistics facilities just isn’t there to meet that demand currently.”

Ms Flaherty said it made sense for bigger retailers like Amazon to purpose-build properties like the Craigieburn sort centre.

“A business on the size and scale of Amazon will probably look to purpose-build their facilities just because the scale of what they require is not something that is easy to find in the market,” she said.

According to CBRE data published in July Australia has the world’s lowest industrial vacancy rate at 0.8% . The country needs nearly two million square metres of additional industrial space over the next five years to meet the forecast growth in online shopping, according to CBRE’s E-Commerce Trend and Trajectory report.

For each extra $1billion in online sales in Australia, CBRE estimates digital retailers would need an additional 70,000sqm of space to meet the storage and delivery demands from those sales. CBRE estimates that online sales in Australia will grow by $25billion over the next five years meaning the country needs an additional 1.8 million square metres of industrial and logistics spaces.

Mr Perizzolo said the sort centre will allow the retailer to bring together goods picked and packed at different fulfilment centres. Picture: realcommercial.com.au

The Craigieburn sort centre is part of Amazon’s network of 17 sites around the country.  This includes ten logistics sites, six fulfilment centres and now the Craigieburn site.

When the building is fully operational it will have staff on site 24 hours a day working in rotating shifts. The facility will sort over half a million parcels a week when it is fully scaled according to Anthony Perizzolo, delivery services and logistics country leader at Amazon Australia.

“So we’re very confident in the future expansion plans of Amazon in the state of Victoria,” he said.

“So we really have invested for the longer-term and we’ve certainly got room to grow into this site as customer orders grow.”

Having a sorting centre that operates around the clock could give Amazon a competitive advantage against other domestic online retailers Ms Flaherty said noting that in Australia online orders take much longer to reach customers than in other countries where same-day delivery is common.

“If Amazon can capture more and more of the market by increasing the number of distribution facilities that they have and improving the time it takes between ordering goods and receiving them, then this is going to put the squeeze more on other online retailers,” she said.

Mr Perizzolo said once the centre is operational, Amazon would be able to dedicate more floor space in its current Victorian fulfilment centres to storing goods than it can currently.

“Sort centres play a critical role in the e-commerce industry and the whole supply chain network. These kinds of buildings determine where we place inventory, the different speeds we can offer customers and the different shipping options that we can make available,” Mr Perizzolo said.

Construction on the site began in March and when realcommercial.com.au toured the site on Tuesday parts of the building including the roof-top solar panels were already operational. There are 3078 solar panels on the roof of the property that are designed to generate 80% of the site’s electricity needs. There is also a rainwater recycling system for the bathrooms and 12 electric vehicle charging stations in the car park.

The site is just off the Hume Highway in Craigieburn and is 25km from Melbourne’s CBD, 28km from Tullamarine Airport and 30km from the Port of Melbourne. Its proximity to key transport networks is important to Amazon’s ability to shift goods from fulfilment centres to customers Mr Perizzolo said.

“In terms of why here [in Craigieburn] specifically, with these kinds of buildings, it’s really critical to be connected to the infrastructure. And being so close to major arterials was what really helped to get this site selected,” he said.

The Craigieburn site is the ninth property in Australia built for Amazon in partnership with global industrial property giant Goodman Group. Goodman have built more than 12 industrial sites for Amazon in Germany, France, Poland and the United Kingdom since 2006.

Goodman Australia CEO Jason Little said the partnership with Amazon is “helping deliver the infrastructure shaping Australia’s digital economy”.

“Together with Amazon, we believe it’s important to make a tangible difference to the plant and the people on it, which is why several environmentally sustainable design features have been incorporated,” he said.

Amazon launched its Australian site in 2012 and opened its first fulfilment centre in Dandenong South in December 2017.

FAQs about Amazon sort centres

What is an Amazon fulfillment centre and how is it different to a sort center?

Orders placed with Amazon Australia are picked and packed at fulfilment centres. Often a customer will order items that are picked and packed at different fulfilment centres.

A sort centre is where all the picked and packed items come together before the final delivery to a customer.

How does an Amazon fulfillment centre work?

An Amazon fulfilment centre is where goods are picked and packed for customers before being delivered.

Amazon Australia has 17 sites around the country. Picture: realcommercial.com.au

How many Amazon fulfilment centres are there in Australia?

There are six Amazon Australia fulfilment centres.

• Ravenhall in Melbourne, Victoria
• Dandenong South in Melbourne, Victoria
• Kemp Creek in Western Sydney, NSW
• Moorebank in Sydney, NSW
• Lytton in Brisbane, QLD
• Perth Airport business precinct, WA

Where is Amazon’s largest fulfilment centre in Australia?

Amazon’s robotics fulfilment centre in Kemp Creek in Western Sydney is the largest in Australia. The 200,000sqm facility has four levels and is designed to store 20 million items.

The largest Amazon fulfilment centre is thought to be in Mt Juliet, Tennessee in America. The 334,450sqm facility also uses advanced robotics has conveyor belts that run for 19 km.