Amazon’s announcement of a Dublin warehouse to bring faster delivery to Irish consumers was greeted with much fanfare but some smaller retailers are fearful it may severely damage their businesses.
The long anticipated fulfilment centre will open in Dublin’s Baldonnell Business Park next spring and will create 500 jobs.
An Amazon spokesman said the move was “a further sign of our commitment to the communities in which we operate” and would play “a crucial role in providing faster delivery to customers across Ireland including one-day delivery on hundreds of thousands of items”.
Scale of business
It certainly represents a big change for the company and the consumers it serves in Ireland.
Until now many of Amazon’s orders for Irish customers have been fulfilled in the UK but once the centre opens Amazon will restructure its Irish supply chain allowing it and its shoppers to avoid Brexit-related delays, extra charges and red tape.
It may also allow more small Irish retailers use its reseller platform, list their stock on its marketplace and take advantage of its expansive logistics system for deliveries and returns.
And there are a lot of deliveries and returns to handle. It is hard to overstate the scale of the business the company generates each month. All told Irish people spend in excess of €2 billion online monthly with in excess of half of that spending leaving the country, much of it going Amazon’s way.
But there is a dark side to the company’s more full embrace of the Irish economy , according to retailers and their representative groups.
Tomas Kenny of Kenny’s Bookshop in Galway said the move had made him “very nervous, for our own business and for the wider retail sector in Ireland”.
He said the “good news story of the pandemic has been the revitalisation of rural Ireland” with more people shopping locally but he said this commitment to support local businesses would be tested like never before by the deepening of Amazon’s footprint in Ireland.
“Look at what has happened in the US and in the UK in the wake of Amazon, it has been an absolute disaster for traditional retail and I would be afraid the same thing would happen here,” Mr Kenny said. “Some people will be able to meet the challenge and some won’t,” he warned.
He said not only did Amazon have a size advantage it also had name recognition. “It is the default for many people who just assume it is cheaper,” he said adding that his store is cheaper than Amazon for much of its stock.
Tara Hammond set up Slated more than 10 years ago and over the last decade has grown the artisan home-ware brand.
“In the long term this will be seen as bad news,” she said.
She said the it would alter the expectations of consumers when it comes to delivery times. “When Amazon starts doing same day delivery then that is what people will expect from everyone and they may not appreciate that smaller artisan operations will have longer turnaround times.”
She also said that the power Amazon exerts with search engines “is colossal, they almost always come up first”.
She suggested that people would move all their business to Amazon at their peril. “I think that people need to change their mindsets, we have to go back more to shopping local and thinking about the butcher, the baker and the candle stick maker, the people who make our towns and communities what they are.”
Big boys
Alo Donegan owns a small electrical store in Market Square in Portlaoise , Co Laois and he said there has been significant damage has to the local economy by the likes of Amazon but he suggested there was still fight left in traditional retail.
“Amazon are the big boys, but there’s definitely a lot of people who have moved away from them and they’ ll only buy from them if they really need to,” he said.
He said he would never consider working with Amazon to sell his products as they don’t have “that personal touch. They’re just wiping out smaller stores. We’ll continue to paddle our own canoe as we’ve been doing for 90 plus years.”
Duncan Graham of industry lobby group Retail Excellence said he has reservations about the moves by Amazon.
On the plus said, he said, its presence in Ireland would give more opportunities for Irish retailers to find alternative sales channels by selling on the Amazon platform but the flipside is that there will be more competition.
He said Irish retailers were “fighting back and we have seen over the last 18 months that here has been a massive move online with shops developing an online presence. I think in the future if you want to be successful in retail you will need both online and bricks and mortar.”
Mr Graham also expressed concern about the lack of a level playing field when it came to operating in Ireland.
“There does appear to be a gap between what these guys pay in tax and what traditional retailer pays in tax but that is the world in which we live and the only answer for us is to develop our own significant presences online, that is the only way to fight back.”
It also remains to be seen how Amazon will treat its fulfilment centre staff in Ireland. In the US it has a reputation for being a hard taskmaster for its lowest-level employees.
There have been many reports over many years of poorly paid warehouse staff being pushed hard with undercover operations at its warehouses painting a picture of staff whose every move is monitored, and who are denied toilet breaks or must take them under strict time constraints. It is also fiercely anti-union.
Only time will tell how its approach to business will impact this country and the people it employs.
