OZ Mega Site To Take On Amazon Being Considered By Wesfarmers

An Australian mega site that will take on Amazon is being planned by Wesfarmers, it will combine products from Coles, Bunnings, K Mart and Officeworks as well as liquor and a large array of house brand products, they will also sell appliances and consumer electronics goods.

There is even talk of a marketplace similar to what currently generates revenues for Amazon. ChannelNews understands that transport group Linfox has been consulted on the proposal. The multibrand site could match Amazon’s first-party and third-party (marketplace) offers and fulfil from distribution centres and stores around Australia, enabling Wesfarmers to beat Amazon on delivery times, said Mr Reeve, a former Tesco and Coles executive.

The downside to the concept is that Wesfarmers is looking to offload Coles a key supplier of food and liquor. ChannelNews understands that despite Coles being in a separate entity it may still be able to be a key partner in the entity running the site.

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E-commerce consultant Jonathan Reeve believes Wesfarmers could easily take on Amazon by establishing a single e-commerce site.

The multibrand site could match Amazon’s first-party and third-party (marketplace) offers and fulfil from distribution centres and stores around Australia, enabling Wesfarmers to beat Amazon on delivery times, said Mr Reeve, a former Tesco and Coles executive.

“Wesfarmers is one of the few companies around the world that has the opportunity to compete with Amazon – they have Coles with groceries, Kmart and Target in general merchandise, liquor, Officeworks and Bunnings,” Mr Reeve told The Australian Financial Review.

He told the Australian Financial Review “If you look across all those brands they’ve actually got the match of Amazon plus they’ve got all the existing [supplier and customer] relationships.

Wesfarmers chief executive Rob Scott declined to comment on whether Wesfarmers had contemplated establishing a multibrand offer or to detail the group’s e-commerce plans, but said momentum was building across the group.

While Wesfarmers’ retail businesses have been working hard individually to shore up their Amazon defences – improving online ranges and delivery options – there has in the past been little collaboration between brands.

In a report late last month, Morgan Stanley analyst Tom Kierath said Amazon’s impact on Wesfarmers’ non-food businesses, which generate earnings of $2.2 billion, was “under-appreciated” by investors.

Mr Kierath said Wesfarmers’ businesses were particularly exposed to Amazon because of high operating margins (11.7 per cent at Bunnings, 9 per cent at Kmart and 7.3 per cent at Officeworks), relatively low online sales penetration (excluding 20 per cent at Officeworks) and a high proportion of leased stores, limiting their ability to close stores.

Wesfarmers shareholders will vote on the demerger of Coles in November.