Published on the 30/01/2025 | Written by Heather Wright
‘Increased competitive intensity’ proves too much…
Wesfarmers, whose brands include Bunnings, Kmart and Officeworks, is transferring ‘select’ digital capabilities to its retail divisions as the company closes its Catch online marketplace in the face of competition from the likes of Amazon and Temu.
The Australian conglomerate bought Catch from founders, brothers Gabby and Hezi Leibovich in 2019 for AU$230 million, as online shopping boomed. The Leibovich’s started Catch back in 2006 as a daily deals website.
“The recent increase in competitive intensity in the Australian e-commerce sector has affected Catch’s financial performance and growth prospects.”
While Wesfarmers is a retail giant locally with its line-up of big brand retailers, a surge in competition from even larger international players such as Amazon, Shein and Temu, has put a damper on Catch’s financial performance and growth prospects, Wesfarmers says.
The e-commerce site will cease to trade as a standalone operating business in the fourth quarter of financial 2025 due to the increase ‘competitive intensity’.
Wesfarmers financial records show Catch lost $96 million in financial 2024 – an improvement on the $163 million loss from 2023. The company reported that it had taken ‘significant actions’ to reset the operating model and cost base, including reducing the in-stock range to around 70 percent below peak historical levels.
At its peak, Catch was valued at more than $1 billion by analysts as it rode high on the Covid-19 online shopping boom. Early promise, however, failed to be sustained and revenues declined $528 million in 2021 to $227 million in financial 2024.
The company faced stiff competition from global giants with Shein entering the Australian market in 2022, followed in March 2023 by Temu.
Last August, research from Roy Morgan highlighted that 1.6 million Australians were shopping each month on Temu, with 1.1 million shopping each month on Shein, driven in part by the lure of ultra-cheap items during the cost-of-living crisis, with Roy Morgan estimating the companies had close to AU$3 billion in annual sales in the 12 months to June 2024.
A month earlier, the research company had noted Amazon was also spectacularly bucking any downward trends, growing its annual customer base by 1.1 million to 7.9 million in the 12 months to June 2024. Around 30 percent were making seven or more purchases in a 12-month period.
Another report, this time from advisory firm Jarden, forecast the combined total value of items sold by Amazon and Temu in 2024 to exceed $6 billion, making up around 40 percent of the total value of products expected to be sold by all online retailers in Australia during the year.
Roy Morgan has the rise of Temu and Shein posed a real threat to local brands, including Australian department stores, and Harvey Norman executive chair Gerry Harvey recently called for a government inquiry into the retailers.
Harvey labelled them ‘pariahs’ killing off local businesses, paying no local tax, not employing Australians and not having to deal with the cost of regulations and rules as local retailers have to.
Wesfarmers managing director Rob Scott says the group’s retail and health businesses, with their omnichannel offerings and trusted brands, are better positioned in the current competitive environment to respond as the market and customer expectations evolve.
“These businesses are supported by extensive store networks, leading e-commerce platforms, the group’s shared data asset and complementary loyalty and membership programs, including OnePass.”
He says Catch has provided the business with ‘valuable insight and capabilities that have accelerated the Group’s digital transformation and supported the development of the OnePass membership program’.
“Since the acquisition of Catch in 2019, Westfarmers’ retail divisions have significantly enhanced their data and digital operations, recording more than $3 billion in e-commerce sales and 220 million monthly digital interactions with customers in the 2024 financial year,” Scott says.
Select digital capabilities developed in Catch and including specialist staff and supplier relationships, will be transferred to Wesfarmers’ retail divisions to strengthen their offerings, while the e-commerce fulfilment centres, currently less than 50 percent utilised, will be transferred to the Kmart business.
OneDigital, the data and digital division which Catch was part of, will now ‘accelerate the development of a group retail media network’, Wesfarmers says. That will include investment in shared systems, data and sales capabilities to commercialise retail media across the retail and health divisions.
Last year the company said big investments in OneDigital were strengthening the overall group, with the OnePass subscription program in particular proving successful and bolstering sales across the Wesfarmer brands.
