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Aussie retailers fight back against Amazon with $160 million e-commerce hub

Aussie retailers had enjoyed the benefit of an Amazon-less retail landscape for a long time. However, Amazon isn’t going away and it’s only going to get more competitive as time goes on.

But, Aussie retailers aren’t just going to lay in their grave. Some businesses have made moves which could save their bacon on the customer service side of things.

Toll has created a $160 million automated e-commerce warehouse, with around $50 million of that being spent on automation which allows the workforce to be a tenth of the size of what it would have been.

The main appeal of the building is that it should only take three hours to go from the time of order to delivery.

One of the tenants for the warehouse is Specialty Fashion Group Ltd (ASX: SFH), which is the group behind City Chic, Millers and Rivers. The fashion retailer is taking up around 40% of the warehouse.

The warehouse can deliver to people’s homes or to stores, giving the customer the flexibility of click and collect or delivery to the home.

The key ways how the warehouse is so efficient is due to the driverless forklift trucks that collect & move pallets and that the clothes for Specialty Fashion are delivered to the staff rather than the staff going to find the clothes.

Specialty Fashion are going to close at least 300 of its 1,000 stores so that only the profitable ones remain. Around 12% of its sales are now done online and this is what’s going to drive any future growth.

The option of three-hour delivery is now there but it will take customer demand to drive up its usage. A lot of people may be willing to wait a little longer and get free delivery at the store, for now. Harvey Norman Holdings Limited (ASX: HVN) and JB Hi-Fi Limited (ASX: JBH) should take note how its retailer peer is making a huge change to survive and thrive.

Foolish takeaway

Other retailers will have to up their game if they want to keep making profit beyond the next few years. People will keep wearing clothes and using electronics, but Aussie retailers have to improve their service and value offering to customers.

These stocks could also be good ways to beat the Amazon effect.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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