Bunnings charts e-commerce expansion

bunnings-uki-st-albansBunnings Australia has signalled an intention to further expand its e-commerce offer after a successful special orders trial saw it introduce transactions to its website for the first time.

Australia’s largest home improvement chain has one of the most visited websites in the retail sector, but until a few months ago customers were unable to buy anything from the business online.

There are thousands of instructional videos and product information pages on its website – but customers looking to get a pair of Hard Yakka boots or a Hose Reel delivered would have been out of luck.

No more. Bunnings Australia has been offering online ordering on a selected range of just over 20,000 products for a few months, following a staged roll-out across the country.

Managing director Michael Schneider said on Thursday that he was pleased with the initial response to the trial and that the business would look to expand its digital capabilities in the coming years.

“A strong physical presence that’s complimented with an increasing e-commerce platform will help us develop a winning offer,” he told analysts and shareholders at parent Wesfarmers’ annual strategy day.

Read more from Wesfarmers’ 2018 strategy day:

While Bunnings late-to-the-party approach to e-commerce may same alien in the world of modern retail, the business has long maintained a preference for luring customers to its service-centric instore offer.

It is also expensive to create delivery networks at scale in Australia, particularly for bulky home improvement products.

But with around 13 million people visiting its website each month, Schneider said special orders was a logical step for Bunnings.

Bunnings' special orders range.

Bunnings’ special orders range

“Its been a long time coming,” he said. “We’re probably been misunderstood in the way we’ve talked about our digital ecosystem … it was a logical step for us.”

Click-and-collect is now firmly on the agenda, with inventory accuracy now in the 90 per cent range, inching closer to being able to provide customers with a seamless in-store collection model.

“There’s no doubt in my mind that [click and collect] is where we will end up, that’s the reality of the world we live in now,” Schneider said.

Earlier this year outgoing Officeworks managing director Mike Ward was appointed to the Bunnings board, a move that Wesfarmers managing director Rob Scott said on Thursday would bolster Bunnings’ stable of online expertise.

Ward has undertaken a digital transformation at Officeworks in recent years, forming it into a leading multi-channel retailer in the office supplies space.

But online is just a piece of Bunnings growth aspirations as the business prepares to become the biggest fish in the Wesfarmers pond following the demerger of Coles in FY19.

Schneider said Bunnings will target 10-14 store openings per year moving forward and expand its addressable market by increasingly investing in its commercial business.

Wesfarmers has earmarked both Bunnings and discount department store Kmart for additional capital investment in the coming years, which is expected to focus on digital and data capabilities.

Schneider said on Thursday that Bunnings was expanding its data analytics unit to support more robust insights on ranging opportunities and also more personalised advertising to customers.

It runs in tandom with a renewed focus on seasonality across the business, using data to provide shoppers in Darwin with different products at different times to those living in Tasmania.

With our investments in data and analytics and leveraging our long-term supplier relationships we can tailor our offer to be even more relevant to our customers in the markets in which they operate,” Schneider said.

Meanwhile, emerging smart home trends have also been identified as opportunities for product innovation and category expansion.

Schneider said the smart home market was potentially lucrative for Bunnings’ which could benefit from working with industry leaders to develop and retail a range of integrated solutions.

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