In a surprising move, Netherlands-based online retailer VidaXL is set to ramp up its local presence by building a mega warehouse in Melbourne’s west.
The 81,000-square-metre distribution facility will be built in Tarneit, after a deal was made between Frasers Property Industrial and VidaXL’s Australian subsidiary HB Commerce, according to the Australian Financial Review.
The move by the Dutch home and garden products company comes as a growing number of e-commerce businesses acquire new warehouse facilities amid the online shopping boom generated by COVID-19.
Amazon will build an even bigger 200,000 square metre warehouse in Sydney and DHL is expanding its distribution capacity with a new centre in Melbourne’s north.
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Speaking to SmartCompany, retail expert at Queensland University of Technology’s Business School, Gary Mortimer, says global businesses are constantly looking for new markets where they can set up shop.
“If you think about the Australian economy, and more recently consumer confidence, it demonstrates that we are a very viable economy,” Mortimer says.
Australia has been less disrupted by the coronavirus pandemic than other national economies around the globe, including the United Kingdom and the United States.
“We’ve now got global businesses looking to set up shop in Australia,” he says.
Founded in 2006, VidaXL has grown from selling products via other e-commerce platforms such as Amazon, Ebay and Kogan, to also sell from its own webstore.
Within 14 years, the Dutch company, which offers a range of products in the home, garden, furniture and sporting goods categories, has grown its market reach across Europe and is active in 29 countries.
The growing number of global e-commerce companies building warehouses in Australia is unsurprising given the recent spike in online shopping over the past year.
Australia Post recorded its biggest month in its 211 year history in December 2020 with more than 52 million parcels delivered — an almost 20% increase on the previous year.
Acting chief executive officer and managing director, Rodney Boys said while he predicted 2020 would be Australia Post’s busiest Christmas ever, it exceeded expectations.
“There is no denying that online shopping grew strongly through 2020, and this reached a new level in December as millions of people chose to buy their Christmas gifts online,” Boys said in a statement.
But the rise of online shopping and large pure-play online businesses such as vidaXL is unlikely to dominate retail spending.
“There are still consumers that want to go out into a nursery centre, touch and feel and engage with products and also get face-to-face advice on technical products and electronics,” Mortimer says.
According to Mortimer, while Australians spent an estimated $45 billion online in 2020 — a 40% increase from the previous year — still only 12.5% of retail sales are made online.
“It still suggests that about 88 cents in every dollar is being spent inside a physical store,” he says.