Woolworths crams years of effort into online ops in eight weeks

Woolworths brought forward digital and e-commerce investments by up to two years and condensed over a year of effort into just eight weeks to regear and then rebuild its online operations.

CEO Brad Banducci said that despite the enormous challenges posed by the coronavirus pandemic, the retailer had pulled together and reinforced an internal aspiration “to come out of this as a stronger business than we went in.”

“What the crisis has done is really forced us to pull forward a whole series of investments into this year - investments we were planning to make in the next 24 months,” Banducci said.

“We don’t think this is a bad thing actually.”

Banducci said the last two months had seen progress in e-commerce that would otherwise have taken a year or more to execute.

He also praised the “ingenuity and agility” of the team behind Woolworths’ online and e-commerce operations.

“I said to the board if we could just bottle this up and take all this creativity and turn it into normal [it’d be] amazing,” he said.

“Literally the creativity and productivity we got in the e-commerce space in the last eight weeks is well over a year’s worth of effort, and that’s because we all leaned in, and it was all driven by a noble cause, primarily looking after vulnerable Australians and New Zealanders, which is pretty amazing and energising. 

“We will come out of this with a much better digital and e-commerce capability across all of our businesses.”

Woolworths resumed regular online services on April 22, having earlier had to restrict their use to vulnerable members of the community.

Banducci said that although it had been the right decision to redirect online in this way, it had been somewhat uncomfortable for Woolworths as it meant being unable to service much of its existing customer base.

“We didn’t really recognise our loyal customers,” he said, though he added that “as the dust settles it appears our customers understand the logic.”

Woolworths emerged from the experience with “a much larger online customer database.”

“We just need to meet their needs,” Banducci said.

“We ended up servicing and introducing ourselves to a range of people we’d never serviced before. In fact we took a whole lot of people and taught them how to order online so in a way technology enabled a whole range of older Australians, which is something quite nice.

“What we’ve got to do now going forward is for those vulnerable customers ordering online, we need to meet their needs, but we now need to go back servicing our existing customers.”

With some form of normality returning - and time to take stock of the past couple of months, Banducci saw opportunities to learn from the way online was handled across the group in this time.

In particular, he predicted, Woolworths and Big W’s online operations would become more closely aligned.

“The real opportunity for us going forward is how we more thoughtfully stitch Big W digitally together with Woolworths, and that’s something we’ll work on as a bit of a priority in the next year in how we leverage the two brands more,” he said.

Banducci also said that pick-ups of online orders would also likely need to change.

“I think our whole pick-up experience will need to change,” he said.

“People do not want to come to a service desk to get pick-up in this world of contactless.”

In its third quarter results, delivered today, Woolworths said WooliesX's growth came in "below recent levels" during the quarter, "due to material capacity constraints in March".

"Online sales in January and February increased by over 40 percent but declined in March with sales increasing by 26.5 percent in Q3," it said.

"Our e-commerce business has steadily been re-establishing all online services with capacity doubling in mid-April to ensure sufficient availability for all customers."

Woolworths said that overall digital traffic "more than doubled in March to 38 million visits, with active app usage increasing to 1.2 million users."

"Customers increasingly started their shopping journeys online and used the website and app as a source of information for their food and everyday needs," the company said.