Fresh from a successful trial of online ordering for a select range of special orders, home improvement giant Bunnings is preparing to offer its shoppers the ability to ‘click and collect’ their purchases.
Millions of Australians visit the Bunnings website each month (13 million to be exact), but until recently, the big box retailer didn’t offer a way to buy goods online.
That changed in November last year, when Bunnings began an online shopping trial for a limited range of around 20,000 ‘special order’ products, which shoppers could order via the Bunnings website and then have delivered to their door.
On Thursday, Bunnings managing director Michael Schneider said the trial had been a success, reports Inside Retail. The plan now is to further venture into the e-commerce space via a ‘click and collect’ model.
Speaking at parent company Wesfarmers’ annual strategy day, Schneider said: “A strong physical presence that’s complemented with an increasing e-commerce platform will help us develop a winning offer”.
Schneider said the ‘special orders’ function was a “logical step” for Bunnings, but acknowledged the business has “probably been misunderstood in the way we’ve talked about our digital ecosystem”.
“It’s been a long time coming,” he said.
The next phase of the plan is to roll out a ‘click and collect’ offering, which would allow shoppers to order their home improvement or garden products online, and then pick them up from their local Bunnings store.
Schneider told the event that Bunnings’ inventory accuracy is now in the 90% range, which means the retailer is well on the way to being able to provide a comprehensive collection model in store.
“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,” he said.
According to industry data from IBISWorld, the hardware and building supplies retail market in Australia is worth an estimated $21.3 billion in annual revenue. That figure is forecast to increase by an annualised rate of 1.2% over the next five years.
But online sales account for just a fraction of the total revenue in the sector: IBISWorld senior industry analyst James Thomson tells SmartCompany online sales accounted for approximately $300 million in revenue over the past year, although sales have grown strongly over the past five years.
That growth is in line with broader consumer adoption of online shopping across the economy, but Thomson says the sector will continue to be dominated by bricks-and-mortar retailers.
Bunnings leads the way in this dominance, with an estimated market share of 35.2%.
Thomson says the number of businesses offering e-commerce options in this space has more than doubled in the past 10 years, with manufacturers also choosing to sell their tools and accessories online. But Bunnings appears to have a clear advantage.
“The ability of Bunnings to also dominate online will come from price power,” says Thomson. Bunnings already has economies of scales via its physical network of stores and this should allow it to offer the same low prices it is known for online.
Dr Gary Mortimer, a retail expert and associate professor at Queensland University of Technology, agrees the “Bunnings offer really does lend itself to an online market”, and he is somewhat surprised there isn’t already a number of retailers dominating this segment of the market.
But he says Bunnings’ seemingly slow and steady approach to selling online makes sense.
“What Bunnings recognise is that it’s not as easy as flicking a switch and going online,” Mortimer tells SmartCompany.
There’s a myriad of challenges in launching a large scale e-commerce offering and online sales still only account for a small proportion of total retail spending in Australia.
“You’re not sending pallets around the country anymore, you’re sending boxes of small items,” he says.
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News Editor
Prior to joining SmartCompany, Eloise was news editor at Books+Publishing, the trade press for the Australian book industry. Eloise has degrees in media and communications, marketing and business management, and political science. You can follow her on Twitter at @ellykeating.
