Ecommerce lifts bottom lines for Australia Post and supermarkets

Retailers’ click-and-collect services raise profits and, with further investment, are set to continue

Exponential growth in ecommerce drove Australia Post to record group revenue of $8.27 billion, up 10.3 per cent for the financial year. And the online driver was echoed in year-end reports from retailers, Coles and Woolworths. 

Australia Post saw 80 per cent growth in ecommerce in the first eight weeks of Covid in FY21 alone.

“The strength of ecommerce – up 31.8 per cent as Australians took to online shopping in record numbers – has supported the result, as did the temporary regulatory changes which allowed us to meet the significant parcel demand and ongoing mail delivery,” said acting group CEO and managing director, Rodney Boys.

To support growth in ecommerce and parcel handling, Australia Post last year invested $450m in its delivery network including investments in processing facilities, fleet and electric vehicles, parcel locker footprint, more delivery options and $50m in security including X-ray, explosive detection and conveyor systems.

Strong growth in parcel handling pushed up revenue from parcels and services by 17.7 per cent to $6.48bn, including a 27.1 per cent increase in Australia Post branded parcels, and 12.1 per cent rise in StarTrack volumes. Cross-border ecommerce business also boosted Australia Post's global business, which reported revenue up 90.6 per cent to $429m as its portfolio of global ecommerce merchants delivered more than 40 million parcels.

Read more: Australia Post's IT and marketing chiefs lead digital change 

The year saw Australia Post keep 99 per cent of post offices open while juggling record parcel volumes and reduced transport capacity as well as disruptions to operations and extra resources in lockdowns. Profit before tax grew by $47.1m or 87.7 per cent to $100.7m as it delivered about 400 million parcels in the year, including 118 million in the last quarter.

The overall result was mitigated by the ongoing decline in the volume of addressed letters, which fell 11.6 per cent and took with it $202m in revenue. Australia Post returned dividends to the government of $46.2m. 

The ecommerce boon was also highlighted by Coles last week in its full-year financial report. The supermarket giant reported total sales of $38.6bn, up 3 per cent year-on-year. Within this, ecommerce sales grew 52 per cent with a fourth quarter growth of 62 per cent to reach penetration of 6 per cent of sales.

The supermarket’s annual report noted it had accelerated ecommerce for liquor and omnichannel capacity through three new fulfilment centres for ecommerce sales. During the year, Coles expanded its click and collect service to 500 stores nationally and will continue this expansion and other ecommerce investment such as the launch of a single app.  

Woolworths, too, opened fulfilment centres and another is yet to come in western Sydney, extending direct-to-boot service for online orders to 629 stores. Group sales revenue for Woolworths A/NZ was up 5.7 per cent to $67.3bn for the year to 30 June 2021, with ecommerce up 58 per cent to $5.6bn. In Australia, ecommerce sales of groceries grew faster than wider group ecommerce sales, increasing 74.7 per cent to become 7.9 per cent of sales.

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