Online retailers battle Woolworths, Coles

Misa Han
September 9, 2014
The Age
Small online retailers are working out ways to break into the highly ­competitive grocery retail industry, with varying degrees of success.
Online wine retailer Vinomofo keeps a highly curated selection of 10 to 20 wines on site with one or two wines added each day.
This model allows Vinomofo to buy a large volume of wine and compete against the large grocery stores such as Coles and Woolworths.
“We buy more of our individual wines than anyone in the country and that’s including the evil empire,” co-founder Justin Dry said .
“It gives us the ability to buy a large volume of a small selection of wine, which means we have buying power even over people like the evil empire of Woolworths and Coles.”
Supermarket and grocery retail is one of the most crowded industries in Australia, with Woolworths, Coles owner Wesfarmers, Metcash and Aldi having a ­combined market share of 90 per cent, according to IBISWorld’s latest figures. The liquor retail market has more legroom, although nearly 60 per cent of the pie is shared between Wesfarmers and Woolworths.
The level of competition means the grocery retailers wield a great degree of power over suppliers, which put ­Woolworths and Coles in hot water recently with the competition regulator over their management of supplier relationships.
Mr Dry said less than 2 per cent of wine tasted pass Vinomofo’s muster, which gives them significant buying power compared to large liquor ­retailers whose volume is spread over a large selection of wine.
Vinomofo also cuts out the distributors and goes straight to the producers.
While Vinomofo exploits soft spots in the big chain’s strategy, online grocery delivery provider Yourfork avoids competing in their supply channel.
Yourfork co-founder Roshan Mahanama said he made a deliberate decision to buy from the major grocery stores, and build a value proposition around fast and convenient customer service, where personal shoppers select ingredients and deliver them within one hour. “There is no way we’re going to get any price advantage over Coles and Woolies,” he said.
“It would be suicidal to try to reinvent the entire supply chain.”
The reception for the service has been mixed. Not as many customers are using Yourfork as expected but it has attracted a number of loyal customers, Mr Mahanama said.

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