Woolworth’s plan for World Domination
We wrote our first piece on this subject HERE, and our second HERE, and if you care about what the WC duopoly is doing to the fresh food business in Australia, Supermarket monsters by Malcolm Knox is mandatory reading.
Now we read in SMH Business Day that ‘Supermarket and liquor giant Woolworths is in the final stages of a plan to crush rival online liquor retailers with a dramatic expansion of its Dan Murphy’s online business, which already has 46 per cent of the online liquor sales market in Australia.’
The centrepiece of this strategy is a Vendor Drop Ship scheme. Under this scheme, customers place orders with Dan Murphy’s online, and DM flicks the order to a winery or distributor who packs the order and advises DM when it’s ready for pick-up. The order is then delivered by Nexday, a courier with a nationwide fleet who happens to be owned owned by Woolworths.
Total Market Domination
The scariest part of the graph below is not the growing domination of the big two, but the fact that it’s taken just ten years to turn it from 70% market share for independents to 70% domination by the two chains.
Source: Liquor gives Coles a hangover, Blair Speedy, The Australian, April 7, 2014
The current market domination is closer to 80%. ACCC chairman Rod Sims tells Max Allen that ‘there’s a clear, massive imbalance in market power, and when you’ve got such an imbalance you can run into unconscionable conduct.’ Max provides a number of examples, but let me ask a simple question: Is this the same Rod Sims who approved Woolworth’s acquisition of Cellarmasters, its call centre and its Dorrien winery in the Barossa a couple of years ago?
It comes as no surprise (except perhaps to Rod Sims and the ACCC) that Woolworth’s is hatching a plan to crush online liquor rivals using the muscle of its Dan Murphy chain. ‘Under the new model,’ the Herald article says, ‘Dan Murphy’s intends to take a 25 per cent slice of the retail price, plus GST, on products sold through the online business.’
A footnote is that ‘Vendors are required to manage the inventory and are being promised an “expedited 10 working day vendor payment”.’ In other words, Dan Murphy’s won’t have to hold any more stock under this pan. The Herald article speculates that Dan Murphy’s range of products will increase from 8,000 to 20,000.
‘Woolworths and Coles have taken over Australians’ lives’
It’s hard to see who’s going to stop the Woolworths juggernaut from achieving total market domination. As we’ve said more than once in the last twelve months: Coles tossed in the towel long ago, on liquor at least, so Woolworth’s remaining rivals are a small handful of independents.
The Herald mentions Kemenys, Naked Wines Australia, Cracka Wines, Get Wines Direct and Graysonline.com. ALDI and Costco don’t get a mention because their market shares are still tiny at present. In any case, they’re huge global grocery and consumer goods chains with no special interest in wine.
It’s when you read the article Woolworths and Coles have taken over Australians’ lives that you begin to understand the reach and muscle these guys can and will exercise. By the time you buy groceries, liquor, petrol, insurance, finance and pharma items (in the near future) from these guys, they’ll know your eating and drinking and driving habits, and your state of health. They’ll know more about you than your government, and almost as much as Google does. More Here.
What can you do? Shop elsewhere while you still can. I mean it.
Independent Choices
We’ve been supporting real wine merchants who live and breathe wine, who have real shopfronts and have added an online business to keep up with the times. Selling wine online has enabled these merchants to offer competitive prices, along with a level of personal service the big chains simply can’t match. In addition, they can offer wines made in volumes too small for the big supermarket chains.
The link below doesn’t take you to a complete list but it shows how many choices remain for those of us who value choice and independence.
Online Wine merchants – the Good, Bad & Ugly Updated
And here are all the reasons why buying online makes whole lot more sense than going to grog shops and schlepping the bottles home.
The Online Option – For once, the lazy way is the best way
Kim
