Amazon.com Inc. announced Wednesday it will open a new warehouse centre in the Greater Toronto Area, the latest in what analysts say is a move to capture more of Canada’s nascent e-commerce market.
It’s the second Canadian expansion announced this month by the Seattle-based e-commerce company, which said two weeks ago that it would establish a warehousing centre in Ottawa. The two facilities are expected to open by the end of 2019 and will collectively employ 1,400 full-time workers.
The new Greater Toronto Area warehouse will be in Caledon, Ont., and is the fourth warehouse centre in the Toronto area. The warehouses will store, pack and ship small items to customers in the province, including goods such as books, electronics and toys.
Amazon said the warehouses will employ a large number of engineers, IT staff and HR workers beyond the warehousing staff. Federal, provincial and municipal politicians welcomed the expansion in a news release, saying it will bolster the local economy and benefit the community at large.
“We continue to be excited about our growth in Ontario and the opportunity to better serve our customers in the region,” Glenn Sommerville, regional operations director of Amazon Canada, said in a news release.
“We’re seeing an incredible workforce and community support in Greater Toronto. It makes us proud to add a new fulfillment center to better meet customer demand."
Ediz Ozelkan, an analyst at the market research company IBISWorld, said Amazon’s announcements come at a time when e-commerce is gaining steam in both the United States and Canada.
Canadian online sales make up an estimated 2.7 per cent of overall retail sales, compared with 9.4 per cent of retail sales south of the border, according to Mr. Ozelkan. But he said growth has still been considerable, as online sales accounted for just 1.3 per cent of sales in 2012. He also pointed out the gap in e-commerce sales between Canada and the United States has been closing, signalling more growth for Canadian e-commerce.
“The low base of Canadian e-commerce penetration could prove to be a lucrative starting point for Amazon’s continued expansion into Canada and can situate them as a major player in the nascent Canadian e-commerce landscape,” Mr. Ozelkan said in a note. “The e-commerce and online auctions industry in Canada is forecast to grow 253.8% between 2013 to 2018, and this has clearly caught the attention of Amazon executives.”
Myles Gooding, a partner with PricewaterhouseCoopers LLP, said the expansion makes sense because other Canadian retailers are also beginning to invest in e-commerce.
“Given the amount of retailers that have entered the Canadian market, it makes it a ripe area for them to come in and start to progress and move a little bit more forward on that front,” Mr. Gooding said.
He pointed out that Amazon announced a technology hub in Vancouver in April, which is another significant investment that will employ 3,000 people when it opens.
“It sends another signal that it’s more than just the warehousing, it’s also the talent equation and being able to build the ecosystem they’re building on a global scale,” Mr. Gooding said.
Amazon currently employs 6,000 people across various warehouse centres, corporate offices and development centres in Canada.