- Australia Post has signed a new $1 billion partnership with Qantas that it promises will prove a coup for customers and Australian businesses alike. However, the biggest winner to emerge from it appears to be Amazon, with local retail market analyst Brian Walker believing Amazon “wouldn’t succeed” in Australia without it.
- The deal will allow Australia Post able to load up as many as 1,500 domestic passenger flights a day with parcels as well as three sole-purpose Airbuses.
- As Amazon expands into Australia’s growing online retail, it will be reliant on the postal system to achieve the kind of scale it has achieved in the US, according to Walker.
Qantas and Australia Post have inked a new $1 billion expansion of the national delivery system, in a move that promises to overhaul online shopping for Australians.
The seven-year deal will see Australia Post use Qantas domestic flights to move freight around the country, commandeering in the process three enormous Airbuses exclusive for freight delivery.
“The enhanced air freighter network complements $900 million in investment across our network through automation and infrastructure, and provides the speed, flexibility and reliability customers expect,” Australia Post CEO Christine Holgate said in a release.
Each will allow the postage service to deliver an additional nine tonnes of post on each flight. That combined with access to as many as 1500 domestic passenger flights a day promises to be a coup for Australian e-commerce.
However, Amazon actually needs the upgrade more than any other retailer, according to consultant Retail Doctor Group.
“As Australia continues to grow its online business it’s important that infrastructure like this continues. Amazon wouldn’t be successful without this sort of deal occurring,” CEO Brian Walker said.
That’s because Amazon is predicted to take up the largest slice of the pie as the Australian online retail market grows. Accordingly, the shopping giant needs the kind of distribution network to allow it to expand here.
“During Amazon’s Prime weekend in the US, 175 million articles were moved by freight and transport in that two-day window,” Walker said.
Compare that to the much smaller Australian market scattered around sparser geography.
“Last year we flew more than 400 tonnes of mail on our busiest night, and more than 40 million parcels during December,” Holgate said.
Those figures are projected to expand year-on-year as the online retail space does the same, enabled by the new Qantas deal, according to Walker.
“Online shopping nationally still represents less than 10% of all retail sales but it represents $30 billion worth of parcels and that figure is experiencing double-digit growth,” he said.
“It’s expected to grow by somewhere between 15 and 20% on average over the next five or so years. Some companies by much more, others by much less.”
It will need to if Amazon’s expansion into Australia mirrors its US footprint.
“We can clearly see, from our global studies and our work with Amazon, that Amazon will take somewhere between two to seven years to hit its straps.,” Walker said.
Given it only launched in Australia in late 2017, Amazon has perhaps got a few years before it begins to fill freight planes all of its own.
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