Consumer cyclical

Zoom2u investors shrug off headwinds as Bunnings delivery deal struck

Wed 08 Jun 22, 2:00pm (AEST)
Bunnings Retail WES Wesfarmers
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Key Points

  • Zoom2u and Wesfarmers’ Bunnings Warehouses execute agreement for the former to make home deliveries of Bunnings products
  • Contract is non-exclusive and Bunnings has no obligation to spend any amount
  • Agreement does expose Zoom2u to a high-impact national chain despite suffering home deliveries sector

Zoom2u (ASX:Z2U) is up 9.7% in mid-afternoon trade as the company announces its execution of an agreement with Bunnings Warehouse, a brand owned by Wesfarmers (ASX:WES)

Bunnings has recently trialled Zoom2u’s software in recent months, and the national construction and homewares chain has now upgraded its partnership with Zoom2u to a formal agreement. 

(Source: Zoom2u) An infographic prepared by the company on the Australian market
(Source: Zoom2u) An infographic prepared by the company on the Australian market

Delivery start-ups currently struggling

Zoom2u will now begin offering its delivery service to Bunnings customers, despite the fact that a number of grocery delivery startups are currently facing strong headwinds borne by food inflation. 

Wesfarmers has also recently seen its retail figures struggling in its Bunnings division. Those bad feelings aside, Zoom2u investors are clearly interested in the news coming out from the partnership today. 

Zoom2u offers a familiar product: delivery services with real-time tracking and ETA data displayed in a dedicated app. 

The company notes it cannot place a value on the agreement minted today, because materiality is unable to be quantified at this time. 

Consumer confidence the driving value factor

The volume of deliveries ordered from Bunnings via Zoom2u will ultimately end up being the deciding factor of how beneficial this partnership is for Zoom2u down the line. 

It is conceivable, however, that without any apparent termination clause signalling an end to the contract, that Zoom2u stands to benefit when consumer confidence in Australia picks back up. 

When that will be, exactly, remains to be seen. The latest consumer confidence data for Australia this week reflected a drop in 4%, a significant record. 

Zoom2u's three month charts with volume information underlying
Zoom2u's three month charts with volume information underlying

 

Written By

Jonathon Davidson

Finance Writer

Jonathon is a journalism graduate and avid market watcher with exposure to governance, NGO and mining environments. He was most recently hired as an oil and gas specialist for a trade publication. Email Jon at [email protected].

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