Could your favorite online store disappear next? Why Woolies abandons online shop after just 3 years
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In a move that’s left many shoppers scratching their heads—and perhaps a few investors reaching for the aspirin.
Woolworths Group has announced it will be shutting down the online marketplace MyDeal, just three years after snapping up an 80% stake in the business.
The cost of this decision? A jaw-dropping $100 million, making it one of the more expensive 'lessons learned' in recent retail history.
A Short-Lived Deal: What Happened to MyDeal?
For those who may not have shopped there, MyDeal was an online marketplace offering everything from homewares to electronics, aiming to compete with the likes of Amazon and eBay.
Woolworths acquired a controlling interest in MyDeal back in 2022, valuing the then-ASX-listed company at a hefty $243 million. The hope was that MyDeal would help Woolies carve out a bigger slice of the booming online retail pie.
But as it turns out, the pie was a bit tougher to chew than expected. Despite bringing 'marketplace expertise and leading technology' to Woolworths’ digital operations, MyDeal struggled to turn a profit in an increasingly crowded and competitive online shopping landscape.
Why Pull the Plug Now?
Woolworths Group’s chief executive, Amanda Bardwell, explained that the decision to close MyDeal was part of a broader review of the company’s portfolio, with a focus on cutting out unprofitable ventures.
'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,' Bardwell told shareholders.
In simpler terms, it’s tough out there, and it makes more sense for Woolworths to focus on its own branded online stores—Big W Market and Everyday Market—rather than trying to keep a separate marketplace afloat.
What Happens Next?
The closure of MyDeal is expected to be completed by September 30. Most of the staff will be offered roles within the broader Woolworths Group, so it’s not all doom and gloom for employees.
The $100 million cost will mostly go towards buying out the stakes of MyDeal’s founders and paying redundancies for outgoing staff. On top of that, Woolworths will write off a further $45 million from the loss of MyDeal’s assets.
In earlier news: Woolworths launches biggest rewards promotions for the year! Here's how you can win
Interestingly, Woolworths isn’t throwing out the baby with the bathwater.
The company plans to use MyDeal’s technology, platform, and supplier relationships to bolster its other online offerings, particularly Big W Market and Everyday Market. So, while the MyDeal brand is disappearing, some of its DNA will live on in other parts of the Woolies empire.
A Sign of the Times in Online Retail
Woolworths isn’t alone in facing the harsh realities of online retail. Earlier this year, Wesfarmers (the parent company of Kmart and Bunnings) shut down its own online marketplace, Catch Group, citing similar challenges.
Both companies have pointed to fierce competition from global giants like Amazon and Temu, which have deep pockets and the ability to undercut local players on price and delivery speed.
In case you missed it: Woolworths' latest change leaves loyal customers fuming—what’s next for rewards?
RBC Capital Markets analyst Michael Toner called Woolworths’ move a 'positive, albeit incremental, step towards portfolio simplification,' noting that MyDeal had 'no near-term path to profitability.' In other words, it’s better to cut your losses now than keep pouring money into a sinking ship.
What Does This Mean for Shoppers?
If you were a regular MyDeal customer, you’ll need to look elsewhere for your online bargains.
The good news is that Woolworths’ other online platforms—Big W Market and Everyday Market—are set to benefit from the technology and supplier relationships MyDeal brought to the table. So, you might find an even better shopping experience there in the near future.
For Woolworths, the answer seems to be focusing on what they do best—leveraging their trusted brands and existing customer base, rather than trying to compete head-to-head with the world’s biggest online retailers.
Were you a MyDeal shopper? Are you surprised by Woolworths’ decision to shut it down? Do you think there’s still room for Aussie-owned online marketplaces, or is it a losing battle against the global giants? We’d love to hear your thoughts and experiences—share your comments below!
Woolworths Group has announced it will be shutting down the online marketplace MyDeal, just three years after snapping up an 80% stake in the business.
The cost of this decision? A jaw-dropping $100 million, making it one of the more expensive 'lessons learned' in recent retail history.
A Short-Lived Deal: What Happened to MyDeal?
For those who may not have shopped there, MyDeal was an online marketplace offering everything from homewares to electronics, aiming to compete with the likes of Amazon and eBay.
Woolworths acquired a controlling interest in MyDeal back in 2022, valuing the then-ASX-listed company at a hefty $243 million. The hope was that MyDeal would help Woolies carve out a bigger slice of the booming online retail pie.
But as it turns out, the pie was a bit tougher to chew than expected. Despite bringing 'marketplace expertise and leading technology' to Woolworths’ digital operations, MyDeal struggled to turn a profit in an increasingly crowded and competitive online shopping landscape.
Woolworths Group will shut down its online retailer MyDeal by 30 September, just three years after purchasing an 80 per cent stake, resulting in a $90-100 million expenditure mainly for founder buyouts and redundancies. Image source: Sky News Australia / Youtube.
Why Pull the Plug Now?
Woolworths Group’s chief executive, Amanda Bardwell, explained that the decision to close MyDeal was part of a broader review of the company’s portfolio, with a focus on cutting out unprofitable ventures.
'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,' Bardwell told shareholders.
In simpler terms, it’s tough out there, and it makes more sense for Woolworths to focus on its own branded online stores—Big W Market and Everyday Market—rather than trying to keep a separate marketplace afloat.
What Happens Next?
The closure of MyDeal is expected to be completed by September 30. Most of the staff will be offered roles within the broader Woolworths Group, so it’s not all doom and gloom for employees.
The $100 million cost will mostly go towards buying out the stakes of MyDeal’s founders and paying redundancies for outgoing staff. On top of that, Woolworths will write off a further $45 million from the loss of MyDeal’s assets.
In earlier news: Woolworths launches biggest rewards promotions for the year! Here's how you can win
Interestingly, Woolworths isn’t throwing out the baby with the bathwater.
The company plans to use MyDeal’s technology, platform, and supplier relationships to bolster its other online offerings, particularly Big W Market and Everyday Market. So, while the MyDeal brand is disappearing, some of its DNA will live on in other parts of the Woolies empire.
A Sign of the Times in Online Retail
Woolworths isn’t alone in facing the harsh realities of online retail. Earlier this year, Wesfarmers (the parent company of Kmart and Bunnings) shut down its own online marketplace, Catch Group, citing similar challenges.
Both companies have pointed to fierce competition from global giants like Amazon and Temu, which have deep pockets and the ability to undercut local players on price and delivery speed.
In case you missed it: Woolworths' latest change leaves loyal customers fuming—what’s next for rewards?
RBC Capital Markets analyst Michael Toner called Woolworths’ move a 'positive, albeit incremental, step towards portfolio simplification,' noting that MyDeal had 'no near-term path to profitability.' In other words, it’s better to cut your losses now than keep pouring money into a sinking ship.
What Does This Mean for Shoppers?
If you were a regular MyDeal customer, you’ll need to look elsewhere for your online bargains.
The good news is that Woolworths’ other online platforms—Big W Market and Everyday Market—are set to benefit from the technology and supplier relationships MyDeal brought to the table. So, you might find an even better shopping experience there in the near future.
For Woolworths, the answer seems to be focusing on what they do best—leveraging their trusted brands and existing customer base, rather than trying to compete head-to-head with the world’s biggest online retailers.
Were you a MyDeal shopper? Are you surprised by Woolworths’ decision to shut it down? Do you think there’s still room for Aussie-owned online marketplaces, or is it a losing battle against the global giants? We’d love to hear your thoughts and experiences—share your comments below!
