Woolworths pulls plug on MyDeal to stem online marketplace losses amid stiff competition
Woolworths will shutter the online marketplace it acquired less than three years ago as part of efforts to stem losses amid stiff competition from global giants like Amazon, Shein and Temu.
The supermarket giant on Friday said it would close MyDeal by September 30, with the cost expected to be between $90 million and $100m, including redundancies.
MyDeal was acquired in September 2022 and added to Woolworths' MarketPlus platform, which also includes the Big W Market and Everyday Market offerings.
Woolworths said MyDeal's closure would help shift the focus towards the two remaining online marketplaces.
They allow third-party sellers to list and sell their products directly through the Big W and Woolworths websites, extending the range of goods available beyond what is typically found in-stores.
In February, Woolworths boss Amanda Bardwell announced a $400m cost-cutting program to simplify the business, flagging job losses as part of it.
On Friday, Ms Bardwell blamed MyDeal's closure on stiff competition, which had been intensified by Shein and Temu's entry in Australia as they gained market share due to heavy discounting and aggressive social media marketing.
'In February we said that we would assess the shape of the group portfolio to address areas where there was not a clear path to profitability or the prospect of a reasonable return on capital,' she said.
'MyDeal has brought marketplace expertise and leading technology to the group's marketplace platform, Woolworths MarketPlus, enabling rapid (gross merchandise value) growth.
'However, given the intensely competitive environment and the superior economics of marketplaces integrated into retail brands, we have made the decision to close the MyDeal customer website.'
Ms Bardwell said the closure of MyDeal would lead to a 'meaningful reduction' in Woolworths MarketPlus operating losses once completed.
The group will also report a non-cash impairment from MyDeal's assets of about $45m.
MyDeal was founded in 2011 by Sean Senvirtne. It listed in 2020 and boasted more than one million active customers when Woolworths acquired a majority 80 per cent stake that valued the Melbourne-based group at $243m.
Woolworths will provide a further update on the one-off costs associated with MyDeal's closure at its full-year results in August.
The retailer's closure follows that of the Wesfarmers-owned online marketplace Catch, which is set to stop trading at the end of the month.
Wesfarmers chief executive Rob Scott at the time said Amazon, Temu and Shein's push into Australia meant Catch had struggled to build the scale necessary to compete.
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