Dan Murphy’s Online Growth Soars

By Sam Gopal | 16 Mar 2016

Liquor retailer Dan Murphy’s online sales are growing at three times the rate of its combined 204 bricks-and-mortar stores, commanding 50 percent of the online liquor market.

Featured at number eight in Power Retail‘s Top 100 Australian Online Retailers in the latest E-Commerce Leaders’ Playbook, Australian liquor retailer Dan Murphy’s sales from its e-commerce operations are said to be growing at a rate three times faster than that of its bricks-and-mortar stores.

Owned by Woolworths, the business has experienced a thriving expansion in recent years and has carved out a dominant presence in the Australian liquor market. The online retailer was also recognised at Power Retail‘s recent All Star Bash, honouring the retail stars of the Australian online retail industry, where it scooped up the top recognition for mobile.

While the growth of its e-commerce operations is outpacing that of its 204 retail outlets, General Manager Campbell Stott told The Sydney Morning Herald it is still a “long way off” overtaking the bricks-and-mortar superstores.

Dan Murphy’s is Australia’s biggest online liquor business, commanding more than 50 percent of the market. It has an estimated two million customers transacting through its online store, with 1.4 million part of its loyalty program.

Stats like these identify Dan Murphy’s as the fastest-growing part of Woolworths’ $8 billion a year liquor business, which also includes the BWS chain. It also marks liquor as the star performer for the supermarket giant after it announced earlier in the year it would be closing down its loss-making Masters Home Improvement chain after acquiring the one-third stake from joint venture partner Lowe’s.

Woolworths has also recorded losses of $927.7 million for the first half of the financial year, being outplayed over an extended period by the revived Coles supermarkets chain owned by Wesfarmers, and representing the first loss for the company in 23 years. In the face of this, Woolworths’ chairman Gordon Cairns has announced that Brad Banducci — who was appointed managing director of Woolworths Food Group in February last year — will take over as Woolworths CEO.

The soaring growth in online sales for Dan Murphy’s has presented smaller wine and beer makers a dilemma as they weigh up the pros and cons of selling through a specific part of the Dan Murphy’s online site called Connections, where they have to manage their own deliveries and inventory, plus accept a lower margin, versus the exposure of high levels of online traffic on the biggest liquor site.

Speaking to Power Retail, Stott defended the growth of the Connections part of the Dan Murphy’s online liquor business, which has undershot original expectations:

“Dan Murphy’s continues to grow its Connections range, giving customers more choice and producers better exposure.

“We kicked off in September 2014, launching with 30 Australian suppliers and a range dominated by wine. Now Connections stocks mores the 4,000 products from 200 Australian suppliers and there is a wider range of products across wine, beer, spirits and accessories. We’re pleased with this organic growth and are keen to quadruple the size of the business over the coming years. Since the launch, we’ve had more than 34,000 Connections orders.

“Connections allows us to continually expand our range beyond the bricks-and-mortar of our stores and this is a great thing for customers. Dan Murphy’s is committed to supporting Australian brewers, winemakers and distillers – big and small – to bring their products to more customers across the country.”

Prior to the Online Retailer Conference in Sydney last year, Power Retail spoke with Faye Ilhan, Chief Digital Officer for Dan Murphy’s about its e-commerce operations. She noted then that fulfilment is critical to its success, part of which entails a single view of inventory across all customer touch points, and ensuring order data is accurate so that, as a retailer, you can predict when products are likely to run low and need re-ordering.

Recording online growth rates three times that of its retail outlets certainly indicates the company is performing well in this area.

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