POST 6: The Fresh Food People return for the people...

Hey guys,

  For post 6, I am bringing to you good old WOOLIES and their determination to utilize social media as a tool for growth of the organization and for supporting the working class people of Australia.

 Firstly lets start off with the brief overview of implementation of social media by Woolworths Ltd. to expand their business. As it was tough to attain an financial documentation which represented the company's exact benefit from utilization of social media, we will assume certain parameters such as the benefit and profitability gain from the online sale recorded in years 2010-2011. Reasons behind a choice of these two particular years is that during the year 2011 Woolworths Ltd. was freshly rolling out the online sale portal for BIG W, their largest online merchandise retailer.

 Woolworths has initiated different avenues of virtual media to get the recognition of the market through Facebook, Twitter ( still under construction), Youtube, Pinterest and Instagram.

 From the FY 2010 to the FY 2011, there is a significance of E2.0 being implemented in the organisation. These results in tangible benefits like mentioned below:

• A 63% increase in the online sales of Woolworths Ltd. products in FY11

• The large wholesale liquor giant Dan Murphy going online in March 2011  

• 'Cellarmasters' acquisition expanding the already strong liquor sector of the organisation

• Woolworths online geographical capacity to exceed 85% of the Australian population

• Incredible growth within BIG W's online sales from the initial launch of the site in May 2010

• The Indian online branch also netting in a cool 26% sales rise

• BIG W’s ‘Big Catch’ and ‘Daily Deal' becoming major trending aspects online for e-shoppers

• The Dick Smith Electronics revamped with the new  ‘Click & Collect’ service being available to Australian consumer

In addition to this there are intangible benefits in the company's future share price through added value in the strong recent performance of the company. This falls on the back of the satisfied customers.

 Lets have a look at impact of getting social in business on ROI (Return of Investment) of Woolworth. From the anuual report of Woolworth for FY 2010 - FY 2011, we got following numbers:

ONLINE SALES = $34,675m

COST of OPERATIONS(the total cost of employees)= $6,262m

GROSS MARGIN (24%) , specified by annual reports has increased from 21% (2010) to 24% (2011)

This increase has clearly shown the value of social media impact on the sales of the products. 

Net Revenue= 0.24*34675=%=$8,322m

Net Cost=$6,262m

   ROI= (8322-6262)/6262*100 = 32.9%

With a return of 32.9% the future of Social media as a source to maximal the profits of Woolworths looks very bright and flourishing. The Company has looked to invest more into the risk of implementing future cash flow into the social media channels in order to attain a greater market share. Currently in Australia Woolworths is the largest and most successful supermarket giant. However in order to keep the online customers it has enlisted social media to keep the online consumers happy by providing delivery services and "click and collect" facilities. 

The risk associated with introducing an online supermarket was no so major as most other major leading supermarkets such as Coles had already initiated their own campaigns. It was mandatory that Woolworths meet the demand and enter a level playing field with Coles. The Risks associated with the initial adaption of the idea to promote more online shopping paid of well for the multi million dollar giant. 

Woolworths has many dispatch facilities and warehouses around Australia which are used to house the goods for the supermarkets. With the increased online demand it has not put any further burden on the supermarkets but become a smooth transition with effective supply-chain management solutions being put into place. 

That's all for this week friends...I will be happy to receive your feedback and suggestions incase I have missed out some part of calculations... :)

Reference:

LIMITED, W. (2014). Response to Competition Review Issues Paper.

LIMITIED, W. (2014). WOOLWORTHS LIMITED PRELIMINARY FINAL REPORT -LISTING RULE 4.3A. Sydney, NSW.

Supermarkets, W. (1997- 2013). The fresh food peoples Woolworths. from http://www.woolworths.com.au/wps/wcm/connect/webSite/Woolworths/