After much speculation on its first Australian site, online retail giant Amazon appears to have settled on Melbourne, reportedly leasing its first distribution centre in the outer southeastern suburbs.

The Australian Financial Review reported that Amazon has agreed to lease the 24,387sq m former Bunnings distribution centre from Pellicano Group, one of Melbourne's largest privately owned construction, development and investment businesses.

The site in Dandenong South is described as "the best distribution centre available in Melbourne's South Eastern suburbs".

The building sits on 7.7ha and became empty when Bunnings moved to a new warehouse.

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The industrial warehouse is available to lease for A$75 ($80) a square metre, which equates to A$1.8m a year.

Leasing agents CBRE declined to comment to the AFR citing strict confidentiality agreements.

Amazon confirmed this year that it would be launching its full offering in Australia - including Amazon MarketPlace, Amazon Prime Now and eventually Amazon Pantry and Amazon Fresh.

In June the company acquired US grocery chain Whole Foods for $13.7 billion, alongside its growing chain of physical stores.

The online giant, founded by Jeff Bezos in 1994, has promised cheaper prices, faster delivery times and access to a greater range of products.

Australian retailers have been gearing up for the arrival of the company for months. Analysts and business leaders alike warn the behemoth could take a significant chunk of business.

In March last year, Richard Goyder, managing director of Wesfarmers - which owns the likes of Bunnings, Kmart and Coles among others - grimly predicted Amazon's arrival in Australia would "eat all our [retailers'] breakfasts, lunches and dinners".

Kiwi commentators have also warned Amazon's arrival will affect the country's retail sales.