Will Kiwis buy into new Themarket experience?
The Warehouse, already a staple in most towns, is aiming to use what it knows about its 3.9 million customers to expand into online shopping.
Themarket was launched on August 1 and offers shoppers access to 1500 brands in what was described as a curated lifestyle shopping experience.
With its latest project, the Nzx-listed company is taking a punt that Kiwis will move more of their shopping online.
The Warehouse executives hope Themarket will evolve into a local version of Amazon. But commentators are wary about the multimillion-dollar bet on Kiwis’ willingness to spend online.
The Warehouse Group chief executive Nick Grayston said Themarket offered products direct from suppliers that were not sold by its stores. ‘‘We already sell to 3.9 million out of 4.8 million New Zealanders. We already have good personalised data through our different loyalty programmes. This is about extending our reach.’’
Despite its deep shopper insight, Themarket is a $12m, 14-month punt on Kiwis doing a far greater chunk of their shopping online. Retail NZ said in its 2018 annual report that online shopping accounted for 8 per cent of the $92.3 billion spent on retail last year. This was expected to grow to 13.1 per cent by 2030.
In Britain, online shopping made up 18 per cent of what was spent in retail last year.
The Warehouse will take a percentage of every sale on Themarket, though Grayston declined to say how much.
He did not expect the site to turn a profit for up to four years. Company shares have dipped 3 per cent since the launch.
New Zealand’s Amazon
‘‘In the United States where they have 110 million households who have Amazon Prime, it is their first go-to point for anything they want to buy.’’
Grayston said Themarket could capture the same sort of territory in New Zealand.
However, the point of difference was the curated shopping experience. ‘‘If you are a brand, to be able to control how your brand shows up, it is an advantage. So it is a win-win. They get the exposure; the customer gets the content and good experience; we control their ability to be serviced and looked after.’’
But it won’t be an easy feat. Retail First Group managing director Chris Wilkinson said Themarket would require the company to sell a fairly large volume of product to recoup the $12m investment.
It has been a tough decade for The Warehouse. The Warehouse Group saw a massive drop in profits in 2016, reporting a $20.4m profit down from $78.3m the year before. In 2018, the group reported a $22.9m profit.
It has made some significant moves to centralise and streamline distribution, confirming this week it had closed nearly all its instore distribution centres for online shopping purchases with the loss of about 40 jobs.