COLES Online has $1b in revenue, moving to automated fulfilment centres, think Amazon, but for groceries

COLES Online to open two automated fulfilment centres in Melbourne and Sydney, think Amazon, but for groceries...

Aussies are increasingly turning to online shopping for groceries. Starting from a single Melbourne warehouse, Coles Online has now become a $1 billion business, leading the market in adoption of game-changing retail and logistics technology.

Coles Online first launched way back in 1999, just a few years after dial-up internet landed in Australian homes. Sure we all have fancy mobile phones to use now, but if you want to shop online back then you’d have to make sure nobody else wanted to make a call.

Less than 5% of all Australian adults using the internet were making online purchases back then. Fast forward to 2019 and the question is, who isn’t?

Launching in June 1999 and fighting off the millennium bug, Coles Online offered delivery services to just 23 postcodes in Melbourne, operating out of a single pick-and-pack warehouse in Clayton. By December that year, a trial commenced in Sydney and the service grey from there.

“The website was almost just a list and you had to tick the items you wanted. Everyone paid via eftpos on the doorstep because no one would pay online via the internet back then. So most people were sort of waiting with trepidation about what they were going to get and it was a really new and surprising experience.”

Brian Donald, one of Coles Online’s longest serving team members

Just a few years later, in 2002, Coles Online had exploded, delivering 1 million items per month to customers, and in 2003 the business doubled in size.

In an effort to cope with demand, Coles Online experimented with other distribution methods, outsourced picking, packing and delivery to Australia Post in 2003. If you’re wondering if that still happens today, it doesn’t, that was returned in house, with Coles team members handling all aspects of order fulfilment from stores across the country. Coles Online’s own fleet of 650 delivery vans is used to bring orders directly to kitchen benchtops.

By 2008 Coles Online had expanded further north to Queensland, and the following year launched in Western Australia and South Australia. The service now had a massive 80% coverage of Australian homes.

With the internet rapidly maturing and broadband arriving in more places, the first Click&Collect lockers appeared in 2009.

Continued growth over the next 6 years seen Click&Collect in 2015 available at more than 1,000 collection points including Coles supermarkets, Coles Express sites and Click & Collect lockers, accounting for around 30% of customer orders.

With annualised revenue passing $1billion this financial year, Coles Online General Manager Karen Donaldson said the business was now setting the foundations for future growth through a partnership with the UK’s Ocado Group, the world’s leading online grocery platform.

“Coles Online has changed enormously over the past 20 years, and that pace is only going to accelerate. As part of our Smarter Selling strategy, Coles is increasing our use of technology to improve efficiency and enable us to keep pace with rapidly-evolving customer needs. Ocado’s automated fulfilment technology and home delivery solution will ensure that we deliver a best-in-class customer experience,”

General Manager Karen Donaldson

Ocado will construct 2 automated fulfilment centres in Sydney and Melbourne by FY2023, think Amazon, but for groceries. This will provide an even greater range and availability, improved freshness, more delivery slots for customers and the world’s leading online grocery website platform.

Importantly it avoids the double handling inefficiency of having staff first pack items on to store shelves, then sending different staff down the same shelves to select items for online orders.

“Coles has been a great Australian retailer for 105 years, and our partnership with Ocado is part of ensuring the sustainability of our business so we continue to win together with our customers, team members and suppliers in our second century,”

General Manager Karen Donaldson

It’s great to see Coles online also now support PayPal as a payment method, avoiding having to hand over your credit card to another company you may not be comfortable with.

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Creator of techAU, Jason has spent the dozen+ years covering technology in Australia and around the world. Bringing a background in multimedia and passion for technology to the job, Cartwright delivers detailed product reviews, event coverage and industry news on a daily basis.
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