Australian retailers will feel pressure to enhance their e-commerce operations.

Where Amazon.com Inc. goes, reactions—often coupled with some anxiety—follow.

Amazon recently announced it is setting up shop in Australia, making the country its 14th market outside of the U.S. where it operates. The move likely will awaken retailers on the continent to amp up their e-commerce offerings and light a fire under the Australia Post to offer faster and cheaper parcel shipping for businesses, says Pete Manasantivongs, academic director, Master of Business Analytics Program at the Melbourne Business School.

“The arrival of any international player causes Aussie businesses to react. But that’s the problem: They are reactive instead of proactive,” Manasantivongs says.

For example, supermarkets Coles Supermarkets Australia Pty Ltd. and Woolworths Ltd., No. 167 in the Internet Retailer 2016 Asia 500, were the only two supermarket chains in the country until the arrival of Aldi in 2001 and Costco Wholesale Corp., No. 8 in the Internet Retailer 2017 Top 500, in 2009. It wasn’t until then, with the heat of competition, that the supermarkets were motivated to be competitive on price and customer service, Manasantivongs says.

The Australian business that will be most affected, Manasantivongs says, will be the Australia Post. Like the United States Postal Service, the Australia Post is shifting toward building out its parcel delivery network and away from primarily being a letter carrier.

Now Amazon, with its fast, cheap and reputable shipping business, enters the market in Australia, and many small business may start using its fulfillment services in lieu of the Australia Post, he says. The Australia Post is a self-funded government enterprise, and the Australian government is its sole shareholder. Even if the Australia Post could match the cost and speed of Amazon’s fulfillment, consumers may have more confidence in Amazon’s delivery systems, and small businesses may go with Amazon for that reason, he says.

“It will be great for smaller business to build a footprint in Australia, and the Australia Post should be worried about that,” Manasantivongs say.

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This would be especially true for the expansive, rural center of Australia. For example, to send a domestic parcel via the Australia Post from Sydney to Alice Springs, a remote town of about 28,000 people in the center of country, takes six to nine business days and prices start at AUS$7.60, according to auspost.com.au.

While Amazon may not be able to guarantee free two-day shipping to every consumer in the country, it may offer a faster and cheaper service compared with what the post office offers, Manasantivongs says.

Amazon’s expansion into Australia will include its first fulfillment center there. Manasantivongs predicts that Amazon might take cues from Costco in where it opens its warehouses, which are close to ports for easy shipment of goods.

Amazon has not announced a location, however a warehouse is most likely to be near Sydney, Melbourne or Brisbane, which are Australia’s three largest cities, all located on the country’s eastern coast. Australia’s population is 24.2 million as of September 2016, according to data released in March by the Australian Bureau of Statistics, and those cities have a combined population of almost 12 million.

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Internet Retailer estimates that 2015 online sales in Australia totaled $10.76 billion, which represents 4.5% of total retail sales. By comparison, online retail sales to consumers in the U.S. reached nearly $400 billion in 2016, according to the U.S. Commerce Department. Internet Retailer estimates that e-commerce now comprises 11.7% of total retail sales in the U.S., which has a population of 323.2 million as of 2016, according to Census.gov. Rewind 10 years, and e-commerce accounted for 5.1% of retail sales in the U.S.—still higher than e-commerce sales in Australia today.

Another item to consider about e-commerce in Australia is its Goods and Services Tax, which is a 10% tax on domestic purchases. For example, a consumer could buy a book at a physical store and have to pay the tax, but if the consumer buys the same book online from an international seller, the tax is not imposed.

The tax law could change, however, as it puts local businesses at a disadvantage. The Australian Parliament is considering legislation that would impose duties, taxes and a Goods and Services Tax on imported online shopping orders for retailers that sell more than AUS$75,000 a year. One of the provisions includes a requirement to notify consumers about the GST costs of their purchases, which could require merchants to calculate and invoice these costs before delivery is made.

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According to the nonprofit group Ecommerce Foundation, 40% of Australian consumers have purchased clothing and footwear from an international merchant, and 416 retailers in the Top 1000 ship to Australia, according to Top500Guide.com.

Similarly, Canadian online businesses are undergoing a transition, also thanks to Amazon (No. 1 in the Top 500). Amazon has opened a fulfillment center every year in Canada since 2011, including the first automated facility outside of Toronto last year, as well as a new data center near Montreal. It’s also expanding the number of cities eligible for free one-day shipping as part of its C$79-a-year ($58) Prime loyalty program. This has spurred Canadian retailers to make pricey investments in online shopping platforms that are needed to attend to a vast and sparely populated country.

“Amazon is pushing a lot of traditional retailers in Canada to up their game and offer better online shopping,” says Paul Briggs, an analyst with research firm eMarketer Inc.

Overall, consumers are aware and excited about Amazon setting up shop, at least the ones he interacts with in larger metropolitan areas, Manasantivongs says. For the full year, Amazon’s international net sales totaled $43.98 billion, up 24.2% from $35.42 billion in 2015, Amazon reported in February. The e-retail said international sales accounted for 32.3% of its total sales in 2016, compared with 33.1% in 2015.

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