Wesfarmers (ASX:WES) plans for e-commerce to fuel Bunnings growth

Bunnings is planning for e-commerce and digitalisation growth.

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Wesfarmers Ltd (ASX: WES) is planning for online growth and digitalisation with Bunnings.

That’s according to reporting by the Australian Financial Review. Bunnings is planning to grow its e-commerce operations, invest in new systems and install a new analytics platform.

How much is Bunnings already selling online?

Bunnings is one of the biggest businesses in Australia. In FY21 it generated $2.19 billion of earnings before tax (EBT) on $16.9 billion of revenue.

Its percentage of online sales is steadily growing. In FY20, 0.9% of sales were online. Then in FY21 it had 2.3% of sales come from online.

At the annual general meeting (AGM), Wesfarmers said that 6% of Bunnings sales had been online in FY22 so far, though lockdowns were impacting the Melbourne and Sydney markets.

Wesfarmers said that all of its businesses have been effective in managing the disruptions on global supply chains and are well positioned with inventory for the important Christmas trading period.

Bunnings’ plans

It was reported that Bunnings wants to improve the customer experience as well as encouraging a friendly atmosphere between people joining the business who are more used to digital things, and existing employees.

Most of the digital transformation is being done by an in-house Bunnings team, not an outsourced IT provider.

Michael Schneider, the boss of Bunnings, says that improving its digital operations is not just about growing online sales, but deepening engagement with 53,000 employees and improving the business for the next generation.

The employee platform that Bunnings is using is Workplace from Facebook, which can create online communities within companies. More than 40,000 employees are using it. Part of the attraction is Bunnings can understand employees better .

One of the things that Bunning has reportedly has done is lifted its game for helping tradespeople. It recently launched a new website that is mobile friendly, compared to the old process of an email system with a click and collection through a smartphone, according to the AFR.

Bunnings has updated its product finder app with interactive store maps. It even shows customers “the best and fastest course around the stores to get all the products on their list.”

It was also reported that lots of commercial customers are using the PowerPass app which allows them to scan as they go around the store and skip the traditional checkout process. In FY21, PowerPass processed 2.2 million transactions, saving 70,000 hours of employee time.

New cloud-based platform

Bunnings is transitioning customer data onto an online platform which will be used for operations of the whole business, including inventory management. This is expected to be finished by the end of FY22. It will come with advanced analytical tools, giving management greater insights about the store network, buildings and systems.

Management commentary

The boss of Bunnings, Michael Schneider, said that the business wants to feature in graduate minds. The AFR quoted him:

I would like them to think it’s a pretty nice shopping experience and the team seem pretty engaged, and it’s probably going to be a good place to work

We are deep in a really genuine tech transformation – we’re going pretty solidly at it, both from a resourcing point of view and an investment point of view.

Those are the sorts of things that when you’re wanting to build your career in the technology space, you’re really looking for, and Bunnings is providing that, alongside all the things that we’re famous for in terms of culture.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Wesfarmers Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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