Hard to fathom Woolies deal with eBay

THE AUSTRALIAN
FEBRUARY 25, 2015
HAS Woolies boss Grant O’Brien lost his mind? How else does one explain his decision to hand over space in his stores to close eBay transactions.
There must be something that’s not obvious to explain the financial logic in this deal, because otherwise it looks fundamentally dumb.
Woolies is giving its store space over to help a rival retailer which doesn’t have the commercial advantage of owning its own space.
The theory is if eBay is popular then why not join it and get its customers into your stores so when they collect goods they will also take the time to buy a couple of litres of milk and orange juice.
What sort of supermarket space is going to be sacrificed to the ebay lockers and who will monitor the lockers: eBay or Woolies?
This sort of deal makes sense if you are Toll and using the local newsagent as your pick-up point for parcels, because Toll is a trucking company competing with Australia Post which has stores all over town.
But here the deal is between two rival retailers: eBbay and Woolies/Masters/Dan Murphy/Big W.
Coles Flybuys has a deal with eBay which means for every $2 you spend on eBay you earn one Flybuys point.
So now you can spend $10 on eBay, go to Woolies to collect the goods and Coles will be tracking the purchase on Flybuys.
O’Brien’s better option is to take on eBay and grow Woolies’ online sales so he actually puts it out of business.
In actual fact the US trend suggests the most popular online stores are those with a physical presence so that you can close the entire transaction within your own core competence.
Woolies has spent a lot of money building a geographic footprint to die for.
Far better to use it for its own purchases than for someone else’s.