Woolworths prepares for Amazon launch

Date : 22 November 2017

Woolworths in Australia will step up its online service and offerings as Amazon enters the market.

Woolworths to open four dark stores

Woolworths has launched a number of different initiatives during the last three months including the country's first nationwide grocery Pick Up service and enhancing its supplier portal. Its latest announcement is to open four 'dark stores' to solely pack and ship online orders. These stores will be closed to customers and are expected to open by the end of next year.

Ready to compete with Amazon

Amazon will offer products sold by third party retailers selling via Amazon, as well as products bought from manufacturers and suppliers sold by Amazon themselves. Their marketplaces frequently offer discounts to drive sales and engagement. Woolworths' chief executive, Brad Banducci, said 'We track pricing against all of our competitors [...] making sure our customers get a good deal every time they shop at Woolworths, so it’ll be part of our price tracking no doubt'.

Woolworths' chairman, Gordon Cairn, warned manufacturers, 'If they go onto Amazon and Amazon cuts prices substantially, what that forces other retailers to do is reflect on whether they should be stocking the brand if they can’t do it and make money [...]'. Cairn highlights service and consumer understanding to become even more important, 'We want to be obsessive about our customers, their needs and how we serve them better [...] if we do not we will lose out to those who do, like Amazon'.

Competitive retail landscape

We have seen many of the leading retailers in Australia announce new initiatives and strategies to combat the increasing competition in the market. Coles for example, are experimenting with their delivery options, teaming up with Deliveroo and Uber to optimise its delivery strategy to stay competitive. Meanwhile Metcash and Costco are looking to implement online websites to drive growth and maximise profit margins.

Woolworths is now out growing fierce rival Coles for the first time since Wesfarmers acquired the business. It will hope that its initiatives will continue the strong momentum that it's gathered and combat Amazon's entry to the market.