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Australia's online grocery industry sees boom amid pandemic

2021 Oct 03, 13:22, SYDNEY
Photo taken on Oct. 1, 2021 shows a sign of Australia Post in Sydney, Australia. (Photo via Xinhua)

The harsh reality of millions of Australians being in lockdown for months due to COVID-19 has proven a blessing for the nation's online grocery businesses which have never been busier.

During the pandemic, Australians have demonstrated growing trust in the delivery services, with online grocery sales expected to increase by 46.2 per cent this year, according to research company IBISWorld.

Panda Fresh, a new offshoot business of food delivery platform Hungry Panda, was created after Sydney, Australia's biggest city, became the epicenter of the nation's latest outbreak and went into lockdown in late June.

Initially targeting Chinese customers, Panda Fresh now serves up fast home deliveries to Sydneysiders in almost every suburb.

"So far we have roughly 30 staff in Sydney. Basically, if you place an order in the morning, you can get your delivery in the afternoon. And if the order is placed in CBD areas, you can receive it in two hours," Panda Fresh's marketing manager Adam Liu told Xinhua.

Liu said the systematic management of goods, warehousing and distribution ensured the team could handle around 500 orders a day, 400 more than the company's humble beginnings.

Australia's supermarket giant Woolworths Group is also ending its 2021 fiscal year on a high thanks to the online sales boom.

Photo taken on Oct. 1, 2021 shows a delivery vehicle of Australia Post in Sydney, Australia. (Photo via Xinhua)
Photo taken on Oct. 1, 2021 shows a delivery vehicle of Australia Post in Sydney, Australia. (Photo via Xinhua)

In a full-year profit and dividend statement, Woolworths said its Australian Food's eCommerce sales soared by 74.7 percent compared to the previous year and its online sales jumped 58 per cent to 5.6 billion Australian dollars (about 4.1 billion U.S. dollars).

However, the surging demand in online shopping is bringing challenges to some sections of the industry struggling with the workload.

"As a direct result of the demand, we start to see consumers disappointed in the service levels," Professor Gary Mortimer, a retail expert from the Queensland University of Technology, told Xinhua. "And that could be extended delivery times, mistakes with orders being picked, or short date codes on grocery products being delivered."

Mortimer said the decentralised picking system used by most Australian supermarkets and increasing demand were the main difficulties.

"Supermarkets are bringing groceries and packing it onto the shelf, and when an online order is placed, they walk up and down to pick the groceries back off the shelf to send it to somebody's house. As you can imagine it's pretty costly, and an inefficient way to pick groceries," he said.

In response, Woolworths and its supermarket rival Coles are introducing automated fulfilment centers, which means goods will be simply distributed after arriving at centers, and mostly relying on robots to do the grocery picking.

Photo taken on Oct. 1, 2021 shows post boxes in Sydney, Australia. (Photo via Xinhua)
Photo taken on Oct. 1, 2021 shows post boxes in Sydney, Australia. (Photo via Xinhua)

"Dark stores" have also been introduced into Australia, said Mortimer. "It looks like a supermarket, but a bit bigger. The only difference is it actually doesn't have any customers, so the products arrive and get automatically picked and distributed out to customers' homes."

Mortimer believes the shopping habits developed throughout the past 18 months of regular lockdowns will continue even when the pandemic has ended.

"If you've set up an online account for your favorite supermarket brands, you've entered your credit card details, your delivery address, you've created a shopping list so over a period of time habits form."

It could also end up being a cheaper option than traditional shops since the running costs of e-commerce are expected to be lower than those of physical stores.

"The costs tend to go down, particularly in pure-play online retailers, because they don't have as many physical stores dotted in Australia, therefore less staff, less leasing costs," Mortimer said.

"I don't think we're going to see less online grocery shopping in the future. I think we'll see the same level but obviously, the growth rate will slow," he said.


Asutralia Australia COVID-19 Online Grocery Business Online shopping IBISWorld Hungry Panda Woolworths Group Online sales Australia Online Sales Australia Online Grocery Shopping XINHUA e-commerce Australia Online Business
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