Woolworths parcel deal to boost instore traffic

ELI GREENBLAT
November 30, 2016
The Australian
Woolworths boss Brad Banducci is happy to make room for ­rapacious online retailers such as Amazon and eBay by handing over space at 500 of his super­markets for parcel delivery lockers — just as long as those online shoppers duck in for a carton of milk or loaf of bread, too.
Unveiling a deal yesterday with Australia Post chief executive Ahmed Fahour, a former Boston Consulting Group colleague of the Woolworths CEO, Mr Banducci confirmed a pilot program launched last year to install eBay parcel lockers at selected stores had triggered an increase in ­instore supermarket traffic and purchases.
But with Amazon eyeing off a push into the $90 billion Australian grocery sector, as eBay and a legion of other online retailers eat away at bricks-and-mortar stores such as Woolworths and its Big W chain, some analysts have questioned the sense of giving space in Woolworths stores to facilitate rival transactions.
“We live in a world of frenemies,’’ Mr Banducci told The Australian yesterday. “The digital world merges with the physical world, and I think someone could buy an Amazon product and get it delivered through the (Woolworths) store. But on the other hand, they are going to come to our store to do that, and of course we have to back ourselves.
“They are going to come into our store, a percentage of those customers will pick up something convenient for dinner tonight or for lunch that day, or whatever the case may be.’’
At the Woolworths annual meeting in Sydney last week, the nation’s biggest retailer said it had set up a separate unit to respond to the looming ­arrival of US online retail giant Amazon, while others such as Coles have also warned of the looming impact to sales on Amazon’s launch.
Under the Woolworths deal with Australia Post, at least 500, 24/7 free parcel lockers will be ­installed in supermarkets across the country from this month, providing shoppers with parcel collection and returns services.
It turns each Woolworths supermarket into a mini post ­office or retail hub as parcels and packages bought from local and international retailers are dispatched. This is especially convenient when considering that about 91 per cent of Australians live within 10km of a Woolworths.
“It’s scaleability that is the key,’’ Mr Banducci said, “which is why we are very attracted to Australia Post, who are leaders in the space, as you need the volume.
“And our experience is that when people do come and pick something up from a parcel collect locker, they also do more of their shopping in our store.’’
Mr Fahour said as e-commerce continued to show encouraging growth, it was essential that the country’s largest e-commerce parcel company introduced new customer services.
“What we are really doing is saying that we have a unique opportunity to make it more convenient to do online shopping,’’ Mr Fahour said.
“And many customers these days aren’t home, they are working Monday to Friday, working even on the weekend, and they want to get hold of their packages, but it isn’t necessarily convenient for them to be at home.
“The reality is one of the most convenient places in Australia is a supermarket site, with car parking facilities and ease of access.”