Australia’s largest supermarket chain, Woolworths, has revealed its plans to form a strategic alliance with e-tailer GreenGrocer.com.au. Woolworths will become a minority shareholder with an investment of A$12m for a 26% stake in the company. CEO of Woolworths, Roger Corbett explained: “we saw it as a strategic investment to build up a type of relationship in terms of knowledge and entrepreneurialship.”
The supermarket group was approached by the online retailer, which sought an equity injection to fund its product expansion plans during the second half of 2001. Woolworths can, in turn, benefit by learning from the experience of GreenGrocer.com in order to expand its own online offerings.
“We see there to be some synergies between the two – exactly what those synergies will be we’ll see in the future, but we’re slowly moving ourselves down a path as part of, if you like, a learning process and part of an investment for the future,” said Corbett, commenting that the group is “feeling our way” to national expansion.
“This alliance,” he added, “brings together two leading ‘clicks’ and ‘bricks’ retailers – which will add value to both parties.”
Woolworths has been online since early in 1998, and GreenGrocer.com was the first of its kind in Australia when it began trading in October 1997. CEO of the online company Douglas Carlson is positive about the benefits of such an alliance: “The Woolworths investment will enable us to provide greater choice and convenience.”
“Customers will soon be able to do selected grocery shopping with GreenGrocer.com.au and we are anticipating a good increase in customer basket size,” he added.
Despite having 60,000 registered customers, Carlson believes that it is still early days for Internet shopping as a concept but both companies are positive about the future. Corbett commented: “Those people that understand it and are able to execute it the best will be the people that will do best in the long term.”