Woolworths acquires $350 million online sales company

Woolworths (ASX: WOW) has announced the purchase of the New Zealand-based direct retailer EziBuy for NZ$350 million. According to Woolworths:

“EziBuy is a leading direct-to-customer retailer of apparel and homewares in Australia and New Zealand operating primarily via an online platform, catalogues and contact centres. The acquisition will accelerate Woolworths’ growth of its multi-option business with enhanced capabilities, as EziBuy is scaled specifically for fulfilling direct-to-customer orders.”

With 68% of EziBuy’s sales already from Australia and a world-class distribution centre that specialises in direct-to-consumer logistics, Woolworths’ management believes EziBuy can help it expand further in to the online and direct channels.

It’s not the first time Woolworths has made an acquisition in this space. In 2011 Woolworths purchased Cellarmasters from Archer Capital for $340 million. At the time Cellarmasters was described as one of the largest direct-to-home wine retailers and providers of contract bottling and wine services in Australia and NZ.

Given the rise in online shopping and growing consumer preference for a home delivered option, shareholders should be well served by Woolworths’ management focussing on boosting the company’s market strength in this field. Whether EziBuy turns out to be a value-adding acquisition in its own right though, only time will tell.

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Motley Fool contributor Tim McArthur does not own shares in any of the companies mentioned in this article.

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