Originally published: The Sydney Morning Herald, 10 September 2019
Amazon is challenging Bunnings’ hold on the lucrative gardening and outdoor market with the launch of a new online garden store selling pool supplies, outdoor furniture, barbecues and gardening tools – but no sausages in bread.
The new store, which launches on Tuesday, continues Amazon’s rollout of new categories into the Australian market following the retail giant’s long-awaited arrival in late 2017. These have included baby goods, pets, and pantry food and drinks.
“Our garden store adds to the over 125 million products already available on Amazon Australia, underscored by great value and fast delivery,” Rocco Braeuniger, country manager of Amazon Australia said.
Amazon’s foray into the outdoor and gardening space will see it butt heads with hardware giant Bunnings, which claims more than 20 per cent of the gardening supplies and hardware market. The gardening segment alone is worth about $2.7 billion.
Bunnings is owned by Wesfarmers and is the Perth-based conglomerate’s most profitable business, contributing to 57 per cent of the company’s earnings over 2019.
Bunnings’ earnings before interest and tax grew 8.1 per cent to $1.62 billion last financial year, with growth in the hardware store sustained for over a decade.
Earlier this year Bunnings said its online store would be up-and-running nationally by Christmas after a successful trial in seven stores across Tasmania.
Bunnings has opted for click-and-collect as its primary logistics method, acknowledging the difficulties of shipping bulkier items such as sheds, play equipment and barbecues. However, the retailer is planning to implement delivery options in the next 12 to 18 months.
But shipping an entire barbecue or mower appears to be no issue for Amazon, which will deliver products directly to its customers, including Prime members who receive free shipping and a guaranteed two-business day delivery.
However, items not fulfilled by Amazon and sold through third-party sellers will not be eligible for free shipping and likely incur additional delivery charges and longer transport times.
In a statement, Bunnings managing director Mike Schneider said he welcomed Amazon’s competition but believed Bunnings in-store experience and expertise would win out.
“Having our team of experts in-store means we are also able to offer great service to run alongside our online transaction capability,” he said. “We typically find that many of our online customers like to head into store to pick their items up.”
Trent Rigby, senior strategist at Retail Oasis, believes the international retailer’s launch is not only well-timed but likely to pose a real challenge for Bunnings and other outdoor retailers.
“With the scale and speed that Amazon operates at, they’re a big threat in whatever category they choose to go into,” he said.
“Not only will they compete on price, but the direct delivery option is more appealing and convenient than click and collect.”
Bunnings will still win in a number of key areas, however, with Amazon not selling things such as plants, plumbing and raw construction goods. Mr Rigby believes Amazon’s offering will be suited to the DIY “weekend warrior” types, where Bunnings will retain tradespeople, builders and people doing more significant renovations.
A survey of 1000 Australians conducted by Pureprofile for Amazon showed the majority would be willing to purchase garden and outdoor goods online, with Millennials showing more interest than other generations.