Dear guys,
Shopfast is now owned by Coles.
Do you want to invest in Colesmyer shares?
Cheers,
Sunstone.
Coles Sees Bargain in Shopfast
BY DARRYL NELSON (profile) | May 22, 2003
Coles Myer has acquired online grocer Shopfast for an undisclosed amount. The deal will enable Coles Myer to benefit from the additional volume from Shopfast against Coles' buying capacity and Australia Post's fulfilment, Managing Director for Coles Myer's Emerging Businesses division, Jon Wood, said.
"We will achieve significant benefits for our online business for what is a relatively limited capital outlay for Coles Myer," he commented, adding the deal is part of its strategy for growth in online business.
Initially, Coles Online and Shopfast will continue to operate as separate brands, but pick, pack and delivery will be integrated using the Australia Post fulfilment centre, currently utilised by Coles.
Last month, Shopfast delivered its 1 millionth customer order, and its performance since launching in October 1998 is indicative of how e-commerce is gaining commonality.
"The branding's out there now and we're becoming more acceptable. It's not a novelty thing anymore," said David Woodward, Shopfast spokesperson, just prior to the Coles deal.
The company now has 210,000 registered users across Sydney, Wollongong and the Central Coast, and order volumes are averaging 5400 per week. "There's steady [revenue] growth going on, but we had never expected to grow our customer base so quickly," added Woodward, though he does admit the business had "a lot of media exposure" early on.
What is probably most revealing, however, is the frequency with which regular shoppers are using the service. According to Woodward, 70 percent of shoppers place orders on a fortnightly basis, with many of the others shopping weekly - particularly larger families.
"Once customers get through their first 3 or 4 shops, it does seem to become more habit. That's the point at which they tend to continue and not churn," said Woodward.
Perhaps not surprisingly, the regular shopper demographic appears to be the time-poor kind of person online retail has always thought it would attract. Woodward said Shopfast's typical customer is a 25-39 year-old female, with 2 children and who works in some capacity.
The next million
Before Coles' acquisition, Shopfast was looking to grow revenues from both existing regular shoppers and, in particular, from reactivating those customers that have churned. "We're offering specials that are targeted at individuals. We know our customers better now, so we'll look to reactivate them with specials on products they need," said Woodward.
While it remains to be seen how Coles will now manage Shopfast's growth, there is certainly considerable room for increasing order volumes. On current ratios, only around 2.5 percent of those 210,000 registered users are placing an order in any given week.
With less need for spending on branding, the company has been taking a more targeted approach with niche marketing. As well as emails to former customers, it's providing SMS alerts on special offers to regular shoppers. These usually take the form of 'order now and get free delivery'.
However, it has continued with select branding campaigns, particularly with audiences that fit its demographic. Shopfast sponsors Channel Nine's 'Fresh TV' program, which airs weekday mornings, and the 'StripSearch' reality program. It also has regular radio spots on Mix 106.5.
A fast future
The acquisition of Shopfast includes the customer database, operating software system, delivery vehicles and material handling equipment, and adds Shopfast's business to Coles Online's delivery of more than 1 million products each month.
Despite the growing signs that Shopfast had been ready to begin delivering in other states, up until now there were no immediate plans in that direction. However, it is likely Shopfast will soon be available in Melbourne at least, where Coles Online also operates.
Before the deal with Coles, the company had wanted to focus on improving its service before launching in any new locations. Areas where it believed improvements could be made included site performance, product offerings and logistics, Woodward explained