Woolies rethinks how it does business as online sales boom

Woolworths has had to rapidly reimagine its distribution chain in the face of a 75 per cent increase in online sales, including outsourcing workers and building more logistics centres, the company told Central News.

The supermarket giant has expanded its online shopping services as an increasing number of customers chose remote buying both during and post COVID-lockdowns.

Online traffic increased by 25.8 per cent in 2021 and Woolworths now operates 10 online customer fulfilment centres and e-stores (CFC’s) across the country.

Data from Woolworths 2021 annual report reflected this shift as the online branch of the company, named WooliesX, made $3.5 billion worth of online sales during the year. This represents a significant amount of the $44.4 billion worth of total sales which Woolworths made in 2021.

The 74.7 per cent increase in online sales from 2020 to 2021, is well above the ABS average for the industry.

 

As a result, the Woolworths group has significantly scaled their online, digital and eCommerce services, through the development of customer fulfilment centres (CFCs). These centres are dedicated to the packing and distribution of online orders, operating without physical customers.

Woolworths now operate 10 CFCs and e-stores across the country, with the most recent opening in Lidcombe to service Sydney’s west and south-west.

The centre delivers to local government areas (LGA’s) such as Canterbury-Bankstown, Cumberland, and Parramatta which were subject to particularly strict COVID lockdown measures which limited residents to a 5km radius from their home.

Since lockdowns started, shifts can go up to 3 or 4am.

Nihal Mahara, an online team member at the Lidcombe CFC, said the lockdowns caused a large spike in orders, which were initially difficult to deal with.

“When there were no lockdowns, we usually finished by 12am … but since lockdowns started shifts can go up to 3 or 4am. It’s stressful because we have to stay back to finish on time,” Nihal said.

To deal with this, the Lidcombe CFC was pushed to implement many new staffing strategies, including the outsourcing of staff.

Dani Charbine, Lidcombe’s site manager, said these strategies were essential for the effective operation of the warehouse.

“We were able to utilise labour hire to support the increase in volume, in order to safely process the large volume of orders,” Dani said.

Woolworths online traffic also rose by 2.5million visits per week, a 25.8 per cent increase from 2020. This growth placed increasing stress on CFCs, forcing online team members to be trained in new roles on the go.

“The CFC was not prepared for the amount of people ordering. We had to do things which we never did before … jobs like out-of-stock replenishment and dispatching orders. Try everything and work,” Nihal said.

An Australian Bureau of Statistics (ABS) report, into the economic impact of COVID-19 restrictions for retail services, highlighted that by June 2021 online sales had increased by 11 per cent since June 2020. This rise impacted the food industry significantly where online sales rose by 15 per cent in 2021.

The report also highlighted online retail sales have increased by 249 per cent since 2016, showcasing a huge shift to online shopping over a five-year period.

Despite the rapid changes customer feedback, collected through Woolworths’s voice of the customer survey, was mostly positive. This was reflected by the perfect order rating of online customers which improved by 20.9 per cent during the year.

As restrictions ease and customers begin contemplating shopping in person again, Dani is hoping these positive experiences keep shoppers using the online services on offer.

“I believe online shopping has become a habit and a convenient way to shop in our current busy work lifestyle. It will definitely drop with bricks and mortar customers able to shop comfortably in supermarkets however we feel the online business is an ever evolving piece that will continue to grow,” Dani said.

With this in mind, Woolworths has announced plans to open a fully automated CFC in Auburn by 2024. The move indicates a commitment to the online space and will help the supermarket giants pack and distribute the increasing number of weekly orders for west and south-west Sydney. Woolworths predicts this figure to reach 50,000 by the time of the centre’s opening.

While it is unclear what this means for the online team members currently working at Lidcombe, Nihal said he is happy working in the online space and hopeful the two centres can work together in the future.

“The online market will never go out of fashion. It has a very big scope for the future,” Nihal said.

It is clear that online shopping, even for traditionally brick and mortar industries, is becoming ever popular. Woolworths, through centres such as Lidcombe’s are hoping to adapt and thrive in the new online era.

Main image by Blaise McKee.