Coles’ online business makes a profit for the first time

Coles Online for the first time in its two-decade history achieved profitability in FY19.

Coles Group reported today that its online grocery business had delivered sales revenue of $1.1 billion in the 12 months to 30 June. That figure represents growth of 30 per cent on the prior year.

Coles said the shift to profitability of its online business has largely been thanks to scale, growth in its ‘Click & Collect’ business, as well as technology investments that have helped slash delivery times and optimise delivery van utilisation.

The retailer ended the year with more than 1000 locations supporting Click  & Collect, which it said contributed strongly to the service's sales growth. It is responsible for over 30 per cent of Coles’ online sales, making it the fastest growing component of Coles Online.

“By increasing the number of delivery slots available for customers, shortening delivery windows and simplifying delivery fees, online customer satisfaction was maintained during the year,” Coles said today in its full year results.

In March Coles revealed it had signed a deal with UK company Ocado to roll out a new online ordering and delivery platform.

The supermarket chain intends to implement Ocado Smart Platform (OSP) for online grocery ordering, single-pick fulfilment and home delivery by the end of FY23.

OSP is expected to double Coles’ home delivery capacity, as well as deliver a boost to the profits of its online business.

The investment in OSP is one of a number of major technology initiatives that Coles has unveiled since being spun out of Wesfarmers and listing on the ASX in November 2018.

The company in February detailed a partnership with SAP, with Coles implementing  S/4HANA for ERP as SAP’s SuccessFactors HR platform and Ariba procurement platform.

In March it revealed it would use the NBN to deliver connectivity to more than 2400 stores and distribution centres.

Microsoft and Coles revealed in July that Azure would be the retailer’s cloud platform of choice. Coles said it intended to build an enterprise data platform using Azure, and employ Microsoft’s AI services to help deliver customer insights.

Accenture has been charged with helping implement major tech projects for Coles, which the supermarket operator hopes will help deliver a cumulative $1 billion in savings as part of its Smarter Selling program.

Coles announced today that its full year revenue grew 3.1 per cent to $35 billion. Net profit dropped 9.1 per cent to $1.43 billion.