Online retailer Aussie Famers Direct has gone into voluntary administration and will immediately stop operating, following stiff competition from grocery giants Coles and Woolworths.
The voluntary administration and immediate shut down of Aussie Farmers Direct and its 100 plus franchises will leave more than 260 staff out of work and an estimated 100,000 online consumers with unfulfilled orders. Its online store has been pulled down.
When it first launched in 2005, national food and groceries retailer Aussie Farmers Direct was considered a pioneer in the online retail grocery sector, delivering fresh produce, bread, meats and dairy to Australian consumers’ doors.
But, when it decided to go head to head with Australian grocery chains Coles and Woolworths in 2016, expanding its offering to household goods and Australian-made pantry products, it buckled under financial pressure.
Craig Shepard and Leanne Chesser of KordaMentha Restructuring have been appointed voluntary administrators of Aussie Farmers Direct.
“Unfortunately, it is not possible to continue trading and the business will stop operating immediately,” says Shepard.
Aussie Farmers Direct had made attempts to recapitalise the business, find a strategic partner or sell the business, confirmed by Shepard, but these attempts had failed to find a solution to safeguard the company’s future.
It is understood that the online retailer struggled to compete with the big supermarkets in a tough retail environment exacerbated by low wage growth. The directors of Aussie Framers Direct believe its ability to sell local products was hampered by the promotion of low-cost imported products sold by their opposition, Coles and Woolworths.
KordaMentha has also confirmed that there was little cash in the company. “Most of the company’s debt was held by entities associated with local and overseas investors. There was no significant bank debt,” the advisory firm said in a statement. A meeting of creditors will be called next week.
It is understood that one part of the business, Home Delivery Services (HDS), will continue to trade and is not affected by the administration. HDS is a logistics service that provides last-mile delivery services.
Aussie Farmers Direct launched 13 years ago as a home delivery service for fresh milk, cheese, bread, and juice in Victoria. Over the next five years it expanded to NSW, Queensland, Western Australia, South Australia and the ACT. By 2010, it had been named as the fastest-growing franchise in Australia by Business Review Weekly. Then, it introduced organics to its range of local produce. Two years ago, it challenged the supermarkets by offering thousands of grocery items.