By Emma Koehn
Retail giant Wesfarmers plans to expand its delivery subscription service OnePass to include brands such as Officeworks as local retailers step up the fight against the growing threat of Amazon Prime.
OnePass members pay a monthly fee for free delivery from Kmart, Target, Catch and Bunnings and an option to bundle in streaming service Disney+.
The members are uniquely valuable to the retailer, Wesfarmers told investors at its strategy day on Tuesday, with chief executive Rob Scott saying the program has unique advantages when compared with Amazon Prime.
The Amazon Prime model gives members access to unlimited free delivery from Amazon as well as access to the group’s streaming and entertainment services, and the company recently said it would be expanding the program after lifting its prices for the first time since Prime’s launch in Australia.
OnePass members pay a monthly fee for free delivery from Kmart, Target, Catch and Bunnings.
Nicole Sheffield, who manages Wesfarmers’ OneDigital arm, said OnePass members made double the number of transactions compared with shoppers who were not members.
“They spend more – OnePass members spend an average of $1000 online across the group per annum,” she said.
Wesfarmers’ investment in delivery subscriptions comes as analysts warn that the ascension of Amazon and its Prime membership model poses a risk to companies such as the Australian retail behemoth, and could force them to increase investment in digital platforms.
Amazon’s local operations recorded revenue of $2.6 billion in 2022, up from $1.75 billion in 2021, according to documents filed with the corporate regulator ASIC. Jarden analysts estimated this month that Prime membership could reach 4 million by 2024.
Over the past two years, supermarket giants Coles and Woolworths have also launched programs offering free delivery for a monthly fee.
Scott said on Tuesday that while there were similarities between Prime and OnePass, Wesfarmers was working hard to differentiate its program by adding perks for in-store shopping.
“What will be unique about the OnePass program over time is that it’s a true omnichannel membership program,” he said. “Prime is an online program and has the streaming benefits — but from a retail point of view, the OnePass program will be a very broad, omnichannel program for in-store, click and collect and online.”
Wesfarmers said it would add Officeworks to OnePass in the first half of the 2024 financial year, and would expand rewards available under the scheme, including in-store benefits, though it did not outline specifically what these may be.
‘Honeymoon is over’
Scott said on Tuesday that the company had long been expecting retail trading conditions to slow after the COVID boom.
“I would say that now the honeymoon is very much over,” he said. “It was very predictable, and I feel that our businesses are very well-prepared. We’ve been expecting this for the last 18 months or more.”
Scott was upbeat about trading at Wesfarmers’ key brands – which include Target, Bunnings and Kmart – saying that their focus on everyday essentials put the company in a strong position.
“We expect value to become even more important for customers, and we are seeing that today … with more customers trading down within categories and increasing their share of spend in more value-orientated products,” he said.
“This benefits us, not just in reinforcing the core of what our businesses do, but we’re also seeing a trading down into some of our businesses, which is improving the number of customers that are trading with us.”
Wesfarmers is not the only retail giant pointing out the continued focus on value in the current retail environment. Coles and Woolworths have also highlighted the success of their homebrand ranges as shoppers look to stretch their dollars further.
Wesfarmers shares opened stronger and were up by 0.5 per cent in afternoon trade to $49.30.
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