Woolworths (ASX:WOW) starts construction of project to double online fulfilment capacity

Here is the lowdown on the company’s latest project.

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a smiling employee of an online shopping facility stands with a tablet in hand in front of a warehouse of goods and a vehicle to transport them.

Image source: Getty Images

The Woolworths Group Ltd (ASX: WOW) share price has closed higher on Wednesday. This comes after the retail conglomerate announced that it has started construction of an online fulfilment project.

The news sent Woolworths shares into positive territory today, finishing the session at $40.81, up 0.39%.

Woolworths seeks to better service online grocery needs

In an effort to cater for the surging demand of online shopping, Woolworths is building its first ever automated customer fulfilment centre.

Set to open in 2024, the facility, located in Western Sydney, will have a floor space of 22,000 square metres. To put this into perspective, this is two times the size of Western Sydney Stadium.

Woolworths has employed solutions provider Knapp to equip the facility with its latest automation technology. This will enable 250 workers to pick and dispatch up to 50,000 home deliveries a week across Western Sydney.

To keep in line with its green commitment, Woolworths is targeting a 5-star green star rating for the building. It plans to harvest rainwater, use solar panels for power and provide electric vehicle charging facilities for its delivery trucks.

Woolworths noted that more than 80% of online orders are fulfilled by stores. The development of the new facility builds on recent investments in micro-fulfilment technology at its Carrum Downs (Victoria) and Maroochydore (Queensland) supermarkets.

E-commerce sales have accelerated since the COVID-19 pandemic with the segment now accounting for 11% of all sales.

Management commentary

Woolworths director of e-commerce Annette Karantoni commented:

Online grocery shopping is booming in Western Sydney as more and more customers look to reclaim time in their busy lives.

Over the past two years alone, we’ve seen the demand for online groceries in Western Sydney more than triple. We need to continue investing in new capacity to keep pace with demand and rising customer expectations.

The development of Auburn will provide a major boost to our same day delivery capacity in Western Sydney — unlocking faster and more flexible online shopping options for our customers. For added convenience, we’ll also offer pick up bays with a direct to boot service for local customers who prefer to collect online orders themselves.

Woolworths share price recap

It’s been a fantastic year for Woolworths shareholders, with the company’s shares accelerating to new all-time highs.

Over the past 12 months, Woolworths shares have pushed around 18% higher, mostly coming from year-to-date gains, up almost 20%.

Based on today’s price, Woolworths commands a market capitalisation of roughly $49.74 billion, with approximately 1.21 billion shares on issue.

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Motley Fool contributor Aaron Teboneras 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 has no position in any of the stocks mentioned. 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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