Toll Group focus on “enormous” Australian e-commerce potential
Australian logistics and transport giant Toll Group admitted yesterday that it wanted its new e-commerce service to progress more quickly — but said for now its focus is on getting the operations and technical side right. Toll Group has been developing its Toll Consumer Deliveries business to take on the dominant Australia Post in the Australian e-commerce delivery market.
Brian Kruger, the firm’s managing director, said yesterday that the unit was currently “very focused” on developing the tools available for online retailers to increase its market share.
But, he said the firm wasn’t rushing to expand without having the capabilities behind it.
“Overall while we’d like to be moving faster to grow our share of this rapidly growing market, we’re very focused on making sure we get our operational and technical capabilities right, rather than truing to get too big too quickly,” he told investors.
Toll Group has been building up its infrastructure including two major new sorting facilities in Sydney and Melbourne, which will be important for its growing business-to-consumer activities. The Sydney facility has now opened, while construction is ongoing on the Melbourne facility.
Kruger said yesterday that the big investment at the moment is going into the company’s last mile delivery network, but much of the investment needed depends on achieving volume growth.
He said the online retail market had “enormous” growth potential in Australia because the nation’s e-commerce retail has a relatively low penetration into the nation’s overall retail market.
“Uniquely placed”
The Toll managing director said his company was “uniquely placed” to take on Australia Post in this market, which he described as having “almost a monopoly position”.
“We’re quite uniquely placed to take them on I think, given our depot network capability around the country,” said Kruger.
“The one big advantage that they had over us that was going to be difficult to solve, which is the retail outlet network to deal with a lot of failed deliveries that they have, we’ve largely solved that problem with what we’ve been doing with the newsagents and with ParcelPoint. We’ve now got something like 1,300 alternative delivery points which we think gets us over that hurdle.”
The discussion on Toll Group’s business-to-consumer business came as the company revealed its full year results for the 2014 fiscal year.
The firm saw its annual revenue grow 1.1% year-on-year to AUD 8.81bn (USD 8.81bn), with pre-tax profit up 5.7% compared to 2013, to AUD 298m (USD 277m).
The rise in business-to-consumer activity has been seeing weight per consignment at Toll’s Toll Global Express division fall 6.8% year-on-year to 22.51kg. The trend has particularly affected the financial performance of the road express business, Toll IPEC.
The company said it was addressing the issue by introducing a new pricing structure this summer and by restructuring the Toll IPEC business model.
