Wesfarmers has announced the closure of its online marketplace, Catch, after five years of operation following its acquisition for $230 million. The decision, attributed to intensified competition within the Australian e-commerce sector, reflects the challenges faced by the business, which has consistently reported losses since its purchase.
Rob Scott, the managing director of Wesfarmers, explained the reasoning behind the move: “The recent increase in competitive intensity in the Australian e-commerce sector has affected Catch’s financial performance and growth prospects.” He noted the Group’s retail and health divisions are now positioned more favorably to adapt to changes within the market, especially as customer expectations evolve.
The closure, set for the fourth quarter of FY2025, has also revealed plans for Kmart Group to acquire key assets from Catch. This will include the transfer of e-commerce fulfillment centers located in Moorebank, New South Wales, and Truganina, Victoria. Kmart Group’s managing director, Ian Bailey, emphasized the benefits this transition would generate: “Kmart Group can mejor utilise Catch’s fulfilment centres, which are currently less than 50 percent utilised. The transition will result in faster deliveries to customers at a lower unit cost, reliving pressure on our busy stores.”
Wesfarmers forecasts one-time costs associated with the wind-down to be between $50 million to $60 million, reflecting both the closure and the transition to Kmart. The rising competition may have contributed to Catch accumulating losses exceeding $38 million to $40 million during the half-year ended December 31, 2024. The situation has become increasingly dire with reports indicating Catch's gross transaction value plummeting 28.5 percent to $524 million.
The e-commerce stage for Catch became even more challenging with the emergence of ultra-cheap retailers like Shein and Temu, who have quickly gained traction since their launch operations in Australia within the last couple of years. This fierce competition from well-known giants such as Amazon has also pressured Catch’s market share, creating what Rob Scott confesses keeps him awake at night. “The big international retailers, the likes of Amazon, Temu and others… certainly keep us awake at night,” he mentioned, highlighting the reality faced by the company.
Despite the decision to shutter Catch, Scott indicated positive developments stemming from the acquisition. “While Catch’s financial performance has been challenging, we have gained valuable insights and capabilities...” He pointed to the accelerated digital transformation across Wesfarmers resulting from experiences with the Catch business model.
The move to fold Catch will classify it as the latest casualty of fierce competition and changing consumer behavior. While the job impacts of this restructuring are still uncertain, Wesfarmers indicated they would look to redeploy affected employees across the Group wherever possible.
While projected earnings impacts from the transition may be non-material, the expectation is clear: Kmart Group plans to leverage Catch’s facilities to boost its own e-commerce operations effectively. This reallocation of resources underlines the rapid shifts within the retail market dictated by consumer behavior and advancements.
Wesfarmers’ decision to wind down Catch signals to the industry the significant challenges facing even established businesses trying to navigate the competitive online marketplace. Such closure is emblematic of broader trends affecting retail and acknowledges the increasing pressures e-commerce platforms face amid relentless competition.
Although Wesfarmers will face immediate financial repercussions, the longer-term strategy is to consolidate its strengths within its thriving retail and health sectors, paving the way for future growth opportunities.