ANALYSIS: What Amazon’s local plans mean for workers, consumers, rivals

An Amazon packaging and distribution centre landing on London’s doorstep would be an immediate windfall for the local economy, retail industry observers say.

A massive e-commerce hub,

the possibility of which was first reported by The Free Press

, would need support services, generate tax revenue and employ plenty – combining to create a huge injection of cash locally.

But its long-term toll on the retail sector, as it pushes consumers even faster into the e-commerce economy, will bear watching amid a potential threat to traditional brick-and-mortar shops.

“Any time you get an employer bringing a wide variety of opportunities for a local economy, it puts money in people’s hands,” said Sally Seston, a retail industry consultant with Retail Category Consultants in Toronto and New York.

“If you add a business making that investment from an economic perspective it’s nothing but good news.”

Amazon is building two new warehouses in London and sources tell The Free Press it’s considering locating a fulfillment centre here, where it receives and packages products before shipping them to a warehouse.

Sources say Amazon is considering the site of the former Ford assembly plant in Talbotville. There are several such centres and warehouses in Ontario and Quebec, ranging in size from just over 9,000 square metres up to 93,000 square metres.

“The economic impact will be positive. There will be money flowing into the economy,” said Merril Mascarenhas, managing partner at Arcus Consulting Group, a retail consulting firm in Toronto.

“If a community needs jobs, it will benefit. They may be forced to increase wages” to attract workers, he said.

Amazon grew through the pandemic, and e-commerce has proven to be “recession proof,” he said.

One practical effect of the fulfillment centre locating here is it may speed deliveries, Seston said. In U.S. cities where a fulfillment centre has opened, such as New York, deliveries are often made the same day or next day.

“That encourages people to shop with them. If delivery times are improved, it’s an incentive,” she said.

With Amazon able to speed deliveries and offer free shipping and return with a Prime membership, independent retailers have to make sure they can compete, Seston said. That may include selling through an online marketplace such as Amazon, meaning a local fulfillment centre may improve sales for independents.

“Smaller retailers better up their game. They have to think about whether they want to join them or beat them,” Seston said. “Either way it’s good for consumers.”

Amazon is growing quickly. Before the COVID-19 pandemic e-commerce accounted for eight to 10 per cent of retail sales. It is now about 12 to 15 per cent and growing fast, said Michael Leblanc, a senior retail adviser with Retail Council of Canada.

“E-commerce has gone through a great acceleration due to COVID,” he said.

He believes any move by Amazon to grow its presence is good for the retail sector as well as consumers, because it forces innovation. “Competition is oxygen for retailers and more choice for consumers is good.”

Warehouse and distribution businesses in London will not fear the Amazon centre, as it is unlikely to draw their clients. In fact, the only concern is finding workers from a shallow job pool, said Jason Salmon, founder and president of Drexel Industries in London.

“It will be a boom in terms of jobs, hiring people to staff it. They’re large and will come in and spend a lot of money,” Salmon said. “I’m not worried about it at all. I’m indifferent to it, except with hiring qualified people. The biggest concern is competing for the same employees.”

The online sales platform also has a troubling reputation for creating a demanding, fast-paced work environment that pushes staff hard for not a lot of money, and that has led to high worker turnover rate.

“I have heard different stories from people in the business. Some say they are no different from any other business, others have said it’s a sweatshop. It depends on what role you have,” Seston said.

Job postings for Toronto-area fulfillment centres cited starting wages of $16.70 an hour.

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