Online retail sales are on the way up. Picture: NAB Online Retail Sales Index, Sept 2019
Online retail sales are on the way up. Picture: NAB Online Retail Sales Index, Sept 2019

Graph reveals truth about Bunnings move

Bunnings has announced it is launching an online store, and every Australian thought the same thing at once: What about the snags?

The country came alive with sausage jokes. Twitter was no exception.

Who doesn't love a sausage joke! It brought the whole nation together.

But go behind the sizzle of the announcement and this is big news. The fact Australia's most popular retailer is finally ready to hit the internet marks a major turning point in the history of business in this country.

Because Bunnings is no lazy operator. It's not some start-up. Not some young dreamer. They're a slick machine with the blood of Masters Hardware still fresh on their hands.

Bunnings is not perfect - they failed to grab the UK market - but their knowledge of the Australian market is impeccable, as their growth reveals.

Bunnings has more than doubled its revenue since 2010 - from a huge $6.4 billion to a crazy $13.2 billion.

JUST THE BEGINNING

When Bunnings stayed out of online it was because that was the right option. And when they get into it, it's because it is finally time.

The store will operate under the name MarketLink and is more of an online marketplace than just an online Bunnings store. Bunnings will hook up shoppers with a range of sellers and manufacturers, which means they will be offering a lot of things you can't get in a normal Bunnings.

There has been a bit of chat about Bunnings taking on Amazon with this website but when I look at the list of items on sale - "indoor furniture, whitegoods and kitchen appliances, home entertainment, kitchenware and homeware" - they seem to be shaping up to take on JB Hi-Fi and Harvey Norman too.

Bunnings Managing Director, Mike Schneider said the website is aiming to cover everything "from the front gate to the back fence".

Mike Schneider, managing Director of Bunnings. Picture: Peter Mathew
Mike Schneider, managing Director of Bunnings. Picture: Peter Mathew

THE BIG ONLINE BLITZ IS BACK

Bunnings' big strategic move tells us online retail matters more than ever. Because for a while it was possible to have doubts about that.

Remember the initial rush of enthusiasm and panic about online shopping? Bookshops shut down and bicycle shops started closing too. Then it became clear we were panicking too soon. Online shopping was not a destructive force in most industries, just a small sideline.

Ever since, what has been surprising has been how strong bricks and mortar retail has been.

Companies realised they were still doing most of their sales in physical locations. Even Amazon, that mighty online retailer, started opening up physical stores in America.

The cherry on the top of this backlash against online was when Amazon launched in Australia. It was a gosh-darn fizzer.

We've had the internet for around two decades now and real-life shops in Australia still sell as much stuff in a month as online shops sell in a year.

The NAB online sales index fell and fell and earlier this year even went negative, as the next graph shows, representing the fact that at one point, we were buying less online in 2019 than we did in 2018.

Online retail sales are on the way up. Picture: NAB Online Retail Sales Index, Sept 2019
Online retail sales are on the way up. Picture: NAB Online Retail Sales Index, Sept 2019

But pay attention to that little uptick at the end. That's the start of the next surge, and this time it looks like Bunnings will be part of it.

This surge could be particularly good for our economy too, because, domestic Aussie firms are not only dominating the online retail space, they are currently growing much faster than their international rivals, as the next chart shows.

Australian online retail is bucking the international trends. Picture: NAB Online Retail Sales Index, Sept 2019
Australian online retail is bucking the international trends. Picture: NAB Online Retail Sales Index, Sept 2019

From looking at the data, it seems inevitable online shopping will still keep growing and changing the face of Australian business and society.

Hopefully though, we still sometimes go to the shops and get a few bits and pieces in person.

It's obvious we still enjoy the sense of community you get from coming together at a hardware store and buying a sausage for charity.

Any business that provides that sense of community is likely to retain its loyal customers in-person for a lot longer.

Jason Murphy is an economist @jasemurphy. He is the author of the new book Incentivology


No making up for prolonged drought, but beauty tour a help

No making up for prolonged drought, but beauty tour a help

Shea Beauty was selected as one of two salons in Queensland to enjoy a visit from...

Outback tourism gives economic hope

Outback tourism gives economic hope

A record number of people visited outback Queensland this year reaching up to a...

Boys from the bush join fire fighting force

Boys from the bush join fire fighting force

Firefighters from western Queensland have travelled east to help fight...