Woolworths' Digital Business Strategy: A Competitive Analysis Report

This report examines the challenges Woolworths faces in the Australian market due to Amazon's entry into the supermarket sector. It analyzes Woolworths' resources, including human capital, brand reputation, and physical stores, and identifies both internal and external issues. Key concerns include shareholder worries, insufficiently trained staff, and the impact of Amazon's lower prices and superior customer experience. The report suggests strategies such as strengthening the workforce, leveraging brand reputation, improving online presence, and adopting digital business theories like system thinking. It emphasizes the need for Woolworths to improve its supply chain management, enhance customer satisfaction, and address price competitiveness to maintain market share. The report concludes that while these recommendations offer potential improvements, they require time to implement and achieve the desired results.

DIGITAL BUSINESS
STUDENT DETAILS
STUDENT DETAILS

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Table of Contents
Overview of the issue.................................................................................................................2
Resources of the Woolworths....................................................................................................2
Internal and external issues that need to be solved....................................................................4
Worried shareholders:............................................................................................................4
Insufficiently trained corporate staff:.....................................................................................5
Woolworths offers goods at high prices then the Amazon........................................................7
References..................................................................................................................................8

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Overview of the issue
In Australia, Woolworths is facing adverse issues due to the entry of Amazon in the
supermarket field. As Amazon is creating hindrance for other supermarkets in the country
because Amazon is offering goods at low prices and also ensuring better customer experience
that is attracting a lot of the buyers in an effective and efficient way. Due to this, Woolworths
is facing a major dilemma because there are losing consumer which is putting an adverse
effect on the profitability of the company. Apart from this, Woolworths is also concern that it
is possible that their potential supplier may move with Amazon because the company can
offer better terms to them. At the starting of 2018, Amazon has less than 1% of the online
food and grocery market but due to its strategic decision making for attracting customers, the
company has grown by 39.7% in the last 12 months. Currently, there are more than 2500
products listed on the website of the company. Amazon offers various discounts and offer
products at low prices than the price of supermarkets. This is the reason that successfully
attracts lots of consumers with them.
Resources of the Woolworths
Currently, in Australia Woolworths have more than 995 stores and they have 115,000
working professionals. The company's resources can be classified into three main categories
such as human resource, intangible resources and their stores. First, human resources, the
average pay of the employees depends upon their position. For example: average pay of the
Woolworths employees lies from $38,261 per year for Customer Service Supervisor to
$87,469 per year for Store Manager. The company also have incentives policies for keeping
their workers motivated (Hall & Druce, 2020). Now, in order to deal with the risen
competition through Amazon, the company should focus on strengthening its workforce in an
effective and efficient way. Their workforce will help them to achieve operational excellence

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and if they effectively train their workforce then they have the potential to deliver great
customer experience (Azeem, Baker, Villano, Mounter & Griffith, 2018).
Second, intangible assets, the company has a good reputation in the market of
Australia. The company named as Australia's most valuable brand which is valued at
$11.8billion. The net worth of the company is more than the Telstra and Coles supermarket.
Apart from this, the ALH group has 25% holding in the company (Hall & Druce, 2020). Even
the annual survey of 2017 shows that the Woolworths is the leading supermarket which is
trusted by over 4million customers. Now, the company has a great brand reputation in the
market so the management can utilize this goodwill to attract their existing and new buyers
towards themselves by offering them products at low prices. Here, the major concern is that
the company already selling goods at the lowest possible price (Yeow, Soh & Hansen, 2018).
Now, if they drop more prices then it will impact the profitability of the association. Thus, is
it suggested that the company should start selling goods at the break-even profits of next
quarter and between this time, the management should focus on making more strong
relationships with the suppliers so that the company can get goods at lower prices than now
(Bailey, 2017).
Third, currently, there are 995 stores of the company in Australia which is situated at
the prime locations of the country such as Morley WA, Kalgoorlie WA, Darwin City, Roxby
Downs, etc. The company has stores at great locations that can be easily accessible by the
customers. Now, it is suggested that the company should start the home delivery services to
the nearby locations because Amazon's online supermarket also has the same feature to door-
step delivery of the goods (Sullivan & Gouldson, 2017). This feature of Amazon is helping
them to reduce the store maintenance cost, however Amazon has to bear the warehouse
maintenance cost (Calvo-Porral, Medín & Losada-López, 2017).

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Internal and external issues that need to be solved
Worried shareholders:
The management of the company is worried about the presence of the Amazon. It is
analysed that at the starting of 2018, Amazon had less than 1% of the online food and grocery
market but as time passes the share volume of the company increases to 39.7%. This is
processing serious threat for the Woolworths. Moreover, the company has over 445,000
shareholders and the share price of the company is $41.84. Here, the fundamental reason
behind increasing presence and online grocery volume on Amazon's website is that many
potential buyers are approaching towards the Amazon because the company is offering goods
at low prices. So, it is suggested that Woolworths should also offer goods to the customers at
a low price, the company should offer price to the customers which are the break-even point
for them for some time (Hall & Druce, 2020).
Shareholders are also worried because of the social media ineptitude and poor online
presence of the Woolworths. The company has a poor online presence, as on Instagram the
company has only 154.3k followers and on YouTube, they have only 38.1k subscribers. As
compare to the Amazon, these figures are low because Amazon has 999.3k followers on
Instagram and 433k followers on YouTube. The company has to work to increase their online
presence. Here, the suggested method is that the company should work on “Influencer
marketing”. This is the digital marketing form which involves marketing through celebrities
or other famous personality of the region. Many organizations utilize this marketing style to
grab the attention of their targeted audience. In the same way, the company can also
incorporate this marketing style to enhance their online presence (Janda, 2018).
It is also noticed that another reason for shareholder’s problem is that Amazon's
website is more user-friendly than Woolworth’s website. After reviewing customer’s

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feedback, they have concluded that their website is less user-friendly than the website of the
Amazon. Here, Woolworths should immediately set up a technical team to fix the bugs and
other issues so that the website can be more user-friendly. This is the critical matter because
if a website or mobile application will not be user-friendly then it will adversely affect the
customer’s experience (Calvo-Porral, Medín & Losada-López, 2017).
The company is also worried about utilizing the future generation technology: If the
customer base of the Woolworths becomes more enhanced then the management can
outperform Amazon to the major extent. However, increasing the customer base is not that
simple when there is tough competition in the market. Here, the management should start
incorporating the utilization of future generation technology. For example: the use of
Artificial Intelligence (AI) and Machine Learning (ML). These are future generation
technology which will help the management to increase the customer experience in an
effective and efficient way. However, the company is still operating a self-service counter
which is resultant in saving time for the customers. Moreover, implementing the AI and ML
process is the costly process and it cannot be completely sure said that AI and ML will
definitely able to increase the customer experience to a larger extent than targeted customers
become ready to pay the high prices (Paull & Hennig, 2018).
Insufficiently trained corporate staff:
The management is facing challenges because their corporate staff is not properly
trained with the norms of the online shopping portal (Stefanone, Yue & Toh. 2019). Here, the
management first focus on making the portal more user-friendly for the staff members. The
portal of the company should be simple and easily accessible so that the employees can
effectively and efficiently utilize it. Apart from this, it is better for the employees if they

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conduct a training session for the employees so that employees can learn how to completely
use the online employee portal (Dawson, Hirt & Scanlan, 2016).
Supply chain management (SCM) of the Woolworths is based upon the Product
Lifecycle Management System that is built on TradeStone’s platform. On the other hand,
Amazon’s SCM system is built on the Push-Pull strategy where the warehouse of the
company receives orders digitally and they directly transfer the order to the concerned
department. Here it is suggested to the Woolworths that they should also make their SCM
system more simplified by incorporating the digital method (Janda, 2018). The company
should train their staff members on the effective measures so that staff members can learn to
incorporate the norms of SCM. This will help the management in lowering the cost and
human resources efforts.
It is also identifying that due to incompetent staff performance the company is facing
poor consumer loyalty issues. In the retail supermarket business, it is difficult to make loyal
customers because customers switch to other competitors when they get better prices and
deals. Currently, Woolworths should not focus on making a loyal consumer base because
making a loyal consumer base incur various costs and efforts. Thus, the management of
Woolworths should focus on making an enhanced customer base so that they can gain a
competitive advantage (Patroni, Von Briel & Recker, 2016).
Apart from this, Brand reputation of the company is also at the threatening state. It is
also noticed that the brand reputation of the company is threatening because Amazon is
providing great customer satisfaction and everyday new buyers are adding in the customer
base of the company. In order to overcome this issue, Woolworths should enhance the
measures through which they can enhance customer satisfaction (Ross, Beath & Sebastian,
2017). For example: by making more user-friendly websites and mobile applications, by

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digitalizing their SCM system, by starting delivery services to the nearby locations, etc.
Through these ways, the company can grab the attention of the customers. However, the
management should focus on ensuring that their human resources are providing great
consumer satisfaction (Mialon, Swinburn, Allender & Sacks, 2016).
Woolworths offers goods at high prices then the Amazon
The products prices in the Woolworth’s store are high as compared to the Amazon.
Amazon is offering goods at low prices because they do not have any store maintenance and
store purchasing cost. The company only bears a small warehouse maintaining cost. In this
way, the company incurs the low cost of production and they are able to offer prices at a bare
minimum (Schwertner, 2017). Apart from this, the company is also gaining the support of the
suppliers because it is analysed that many suppliers are making better terms with the
company for offering goods at low purchasing cost. In order to overcome, this problem it is
suggested that the company should sell goods in the store exactly at the break-even prices for
some time. While offering good at the break-even point for some time, the company should
rush for making better relations with its suppliers (Grimmer, 2018).
The digital business theory will help the management to analyse the customer
behaviour through the digital norms and it will also help the management to select effective
advertising tools so that the management can outperform the challenges that are coming after
the Amazon. Apart from this, in digital business theory, system thinking can also be done.
This is the approach through which the management can analyse their decisions based on the
systematic consequences. System thinking is helpful for the Woolworths because it will
enable the management with the systematical analyses each problem with the relevant
solution. However, it is suggested that all the above recommendations will not immediately

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correct the company’s market position, these recommendations will take some time to help
the company in accomplishing their target (Pulker, Scott & Pollard, 2018).

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References
Azeem, M. M., Baker, D., Villano, R. A., Mounter, S., & Griffith, G. (2018). Food shoppers’
share of wallet: A small city case in a changing competitive environment. Journal of
Retailing and Consumer Services, 43(1), 119-130.
Bailey, M. (2017). Absorptive capacity, international business knowledge transfer, and local
adaptation: establishing discount department stores in Australia. Australian Economic
History Review, 57(2), 194-216.
Calvo-Porral, C., Medín, A. F., & Losada-López, C. (2017). Can marketing help in tackling
food waste?: Proposals in developed countries. Journal of Food Products
Marketing, 23(1), 42-60.
Dawson, A., Hirt, M., & Scanlan, J. (2016). The economic essentials of digital
strategy. McKinsey Quarterly, 3(1), 45-50
Grimmer, L. (2018). The diminished stakeholder: Examining the relationship between
suppliers and supermarkets in the Australian grocery industry. Journal of Consumer
Behaviour, 17(1), 13-20.
Hall, J. & Druce, A. (2020). Woolworths: Supermarket profit soars 56 per cent to $2.7
billion. Retrieved from:
https://www.news.com.au/finance/business/retail/woolworths-supermarket-profit-
soars-56-per-cent-to-27-billion/news-story/121712087f5797e5091d09af6e76b7aa
Janda, M. (2018). Woolworths profit jumps, but supermarket warns bag ban is now hurting
sales. Retrieved from: https://www.abc.net.au/news/2018-08-20/woolworths-profit-
jumps-pays-special-dividend/10138970

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Mialon, M., Swinburn, B., Allender, S., & Sacks, G. (2016). Systematic examination of
publicly-available information reveals the diverse and extensive corporate political
activity of the food industry in Australia. BMC public health, 16(1), 283-300.
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Paull, J., & Hennig, B. (2018). Maps of Organic Agriculture in Australia. Journal of
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Pulker, C. E., Scott, J. A., & Pollard, C. M. (2018). Ultra-processed family foods in Australia:
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Ross, J.W., Beath, C.M. and Sebastian, I.M. (2017). How to develop a great digital
strategy. MIT Sloan Management Review, 58(2), pp.7-30.
Schwertner, K. (2017). Digital transformation of business. Trakia Journal of Sciences, 15(1),
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Stefanone, M. A., Yue, Z., & Toh, Z. (2019). A social cognitive approach to traditional media
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Sullivan, R., & Gouldson, A. (2017). The governance of corporate responses to climate
change: An international comparison. Business Strategy and the Environment, 26(4),
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Yeow, A., Soh, C., & Hansen, R. (2018). Aligning with new digital strategy: A dynamic
capabilities approach. The Journal of Strategic Information Systems, 27(1), 43-58.