Woolworths ‘Crashes’ into the Daily Deals Fray

Grocery giant Woolworths has kicked off 2012 by jumping on the daily deals bandwagon via the launch of Door Buster.

‘Don’t pay retail again!’ exclaims the site’s About Us page and promises to offer ‘outrageously cheap prices on products from confectionary to designer handbags and everything in between!’.

Although a recent report from Forrester Research hinted that daily deals sites may experience a decay in consumer interest this year, this trend was clearly not apparent with Woolworths’ latest addition to Australia’s daily deals buffet, which crashed on its first day due to the flood of traffic it received.

Contributing to the crash, was the kickoff offer (emailed to Woolworths Everyday Rewards members) for free delivery on purchases over $20. The offer which is also published on the site, will undoubtedly serve to drive bargain hungry shoppers to sign up for the retailer’s loyalty program, which reaches across its eight other brands (including Dick Smith, BIG W and BWS).

The site offers next day shipping (regular postage times apply), allows customers to browse items via Facebook (transferring them to the website to complete the purchase) and differentiates itself from competitors by stating that it will only sell stock that is available and ready to ship in its warehouse.

In the wake of reporting a 63% growth in online sales for the 2011 financial year, this launch perhaps signals the beginning of implementation of the retailer’s multichannel strategy, which it unveiled in November 2011.

However as uncovered by The Register, an old version of the Door Buster FAQ page, indexed by Google but no longer available, suggests that Woolworths originally hoped to distance itself from the new brand. ‘We’re cheaper than Coles and Woolworths online’ the old FAQ said.

Although competition is rife particularly in the grocery vertical, this perhaps indicates the doubt that Woolworths may have had over cannibalising sales from its other business lines.

This also presents another possible conundrum for established retailers starting to play in the daily deals space, such as Woolworths and Harvey Norman, about whether or not (in the long term) they are setting themselves up for a disadvantage by training customers to expect these highly discounted prices, no matter which channel they shop in? What are your thoughts?