Woolworths is set to open a series of "dark stores" to pack and ship orders as the supermarket giant prepares to compete with Amazon.
E-commerce giant Amazon could be up and running in Australia as soon as Friday after a "soft launch" trial a day earlier.
According to Woolworths Chairman Gordon Cairns, the "dark stores" will be closed to customers and instead used to pack and ship online orders.
He said the stores would be open by the end of 2018.
"By the end of 2018 we'll have about five dedicated dark stores to be able to deliver to customers and improve our performance," Mr Cairns told the Sydney Morning Herald.
While Amazon has not yet confirmed its range in Australia, the company runs the popular a grocery delivery service, Amazon Fresh, in the US.
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"We should give customers options as to how they interact with us – do they want to come into the stores, do they want delivery, do they want to pick up," Mr Cairns said.
"If we do that and we do that effectively then we are in a position to compete much more effectively with Amazon."
He also warned suppliers off selling to Amazon, saying it would be "cutting their own throat," as other retailers could drop their products.
Woolworths chief executive Brad Banducci said the company will monitor Amazon's prices closely to ensure shoppers get a good deal.
There is already one dark store in Mascot, Sydney, but Woolworths plan to have a second in Sydney and one in Melbourne by 2018.