Amazon's decision to move into Melbourne has been celebrated as a win for jobs, but billionaire entrepreneur Gerry Harvey warns the online shopping giant will use a "send everyone broke" policy to put other retailers out of business.

Amazon has announced plans to open its first Australian warehouse at Dandenong South, where it has purchased a 24,000-square-metre distribution centre.

The move is expected to create hundreds of jobs in the suburb, and the local mayor Jim Memeti said that could grow to thousands.

"We're just delighted that a world-renowned name like Amazon wants to set up in Dandenong," he told ABC Radio Melbourne.

Amazon, through its Amazon Marketplace platform, allows third-party businesses to sell their products online.

But it is seen as a major threat to Australian retailers, though the Australian Retailers Association said it posed a bigger problem for other online companies than "bricks and mortar" shops.

Asked if he was concerned about the impact Amazon's arrival could have on local businesses, Cr Memeti said he had always seen competition as a good thing.

"The consumer always wants to pay the right price," Cr Memeti said.

Amazon's Dandenong South base will be its first Australian warehouse. ( ABC News: Michael Gleeson )

'One big giant who owns everything and pays no tax'

Harvey Norman founder Gerry Harvey said Amazon's arrival in Australia could spell disaster for local retailers.

Mr Harvey said his business, which trades in electronics and whitegoods, was unlikely to be affected by Amazon.

But he predicted clothing, accessories and sport retailers would suffer.

"In our business, in refrigerators and washing machines, Amazon have got in the United States of America a 3 per cent share," he said.

"They are not that big in our category [but] they are very big in other categories and they will send a lot of other businesses to the wall.

"Their policy is send everyone broke, we'll take over the business, we'll never pay any tax and then we'll put up the price and we'll own everything."

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Mr Harvey said Amazon was probably an unstoppable force.

"And that's a great pity because then you'll end up with one big giant who owns everything and pays no tax," he said.

"Amazon are going to put a lot of people out of business who pay taxes, employ people, and the great majority of their jobs that they talk about, it's like 90 per cent unskilled, probably higher."

Amazon declined requests for an interview and has not said when the warehouse would open, but said it would immediately start recruiting staff.

The company is now twice as large as Walmart, which used to be the world's biggest retailer, and said it had about 1,000 Australian employees already.

"This new fulfilment centre will stock hundreds of thousands of products which will be available for delivery to customers across Australia when we launch our retail offering," Australian operations director Robert Bruce said in a statement.