Australian retailers laggards in online retailing
Australian retailers are failing to capitalise on sales that could be gained from online retailing, while industry experts remain at odds over just how significant the mobile phone will be in the future shopping experience.
The way in which technology will impact how people shop was a key discussion point among the panellists at the Mumbrella Question Time forum.
Peter Bray, The Brand Shop general manager, pointed to the phenomenon of “web-to-store” – a trend which he said is yet to be understood by Australian retailers.
“If someone has done their research online first, chooses your product then goes into the store to buy that product the volume of their purchase, the dollar figure they spend will be higher than if someone has just gone into your store without doing their research first,” Bray said.
“Online retail has not taken off in this country. The few retailers who actually take the lead and really integrate the digital channel as a direct sales channel and take advantage of it will be miles ahead. But for some reason it hasn’t happened.”
Jeremy Nicholas, BMF executive planning director said conversely, another trend is the way in which are consumers going into stores to shop around and then going online to purchase the product at a cheaper price.
He pointed to one case in the UK, where retailer Dicksons last year launched an ad campaign centred around this idea. Its ads, created by M&C Saatchi London, alluded to popular retailers where consumers could visit, such as John Lewis, and then go to its website to purchase it at a cheaper rate.
Nicholas said however, while online catalogue shopping has long been popular in markets such as the UK, Australians are “rubbish at it”.
The discussion over technology also brought up the role of the mobile phone within the shopping experience.
Bray conceded that while mobiles will be useful in helping navigate people on where to shop and provide them with locally-based services and information as they are walking past a store, the mobile will not be “the answer to everything”.
Roger Camplisson, Initiative chief executive, added if it can be used to improve the shopper’s experience and save time then mobile “technology has a role”.
Meanwhile, Iain McDonald, Amnesia Razorfish creative director and founder, said the next ten years will see a transformation in the way people shop.
He said the agency has rolled out the Microsoft Surface in AT&T stores in the US. They are multi-touch point tables consumers can use to compare prices of mobile phones, replacing the need for face-to-face interaction with a sales person.
“Not everyone wants to be hassled by a sales guy and we’re starting to get measurement around this and see how we’re uplifting sales by not interrupting with the face-to-face experience,” he said.
In Australia, ANZ is trialling the Microsoft Surface at its sponsored events. It is being rolled out by M&C Saatchi in in conjunction with the developers at Object Consulting.
McDonald added the future will see a more dynamic shopping experience.
“We’re not using technology at the moment to change the pricing dynamically for instance. That’s something theoretically we should be able to click a button and adjust the prices of products – the same way petrol changes its pricing. I think we’ll see more of that in probably among FMCG products, as we know people are more likely to buy washing powder on a Friday for example.”
McDonald predicted: “Ten years from now we’ll probably be having a bit of a laugh at some of the ways we’re shopping today.”
Tim Burrowes founded Mumbrella in 2008. He worked on Mumbrella until 2021. At various points he was editor, content director and editor-at-large.
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At it’s simplest, it seems most Australian retailers [and I’d suggest this is still true of a large % of global retailers for that matter] continue to see offline and online retail as different beasts.
Customers see no difference.
At haul we’re finding that punters that have been in our online store prior to coming into a retail store and are not only likely to spend more [much more likely to make multiple purchases] but also transact faster.
http://haul.com.au
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The most scary stat around this issue is that 47% of Australians’ e-commerce purchases are now going offshore – the competition is far more intense.
And from the retailers I’ve talked to the biggest challenge is not building a website or getting franchisees on board, it’s logistics and delivery and ensuring a great customer experience when someone else is delivering it for you.
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I wonder what effect Lasoo on mobile is having for retailers?
It is a lot of power to consumers to be in a store with a sales assistant, to do a price comparison with multiple stores from their phone as they talk and then get them to try to beat the lowest listed price.
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Expecting the big, existing Australian retailers to lead the charge online is like expecting the monkeys at the zoo to paint their own cage. Our big retailers are too busy saving up for shelf-talkers and feather-dusters to make the kind of investment online that is going to grab serious attention. They’ve spent so long waving their big foam hands around on late-night TV that they think digital is ‘expensive’. I hear it every day.
When they do go online with ecommerce it’s invariably the catalogue-style shopping cart model from the late 1990s. Boring, boring, boring. Give your customers the kind of experience they get elsewhere online, and you’ll move product online. But no, we can’t build you one for $20,000.
There are a bunch of smart retailers doing really well online in Australia right now, but they’re not the national chains you might have expected. They have much smaller annual turnover, but they’re investing heavily in digital and they’re coming to get you big guys. I fully expect to be explaining to my children what a shop was.
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How many times must I bring this up at lectures, events, etc…
It’s a cultural thing!
Australians are not used to shopping outside of the shops like the Brits and Americans.
The US and the UK are two countries who have shopped through mail order catalougs for DECADES….so of course, putting those online was a logical first step thus the consumer demand and thus the online shopping populations in those countries will always trump Australia…Oz will never be able to compete in that space when there’s Amazons, J.Crew.com, TopShop.com, etc…
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Australia has one the highest rates of use of online payments on the planet. Almost every business in the country uses the internet for sales transactions in some way.
For pure retail do the math. Its about audience acquisition and conversion costs and the numbers are just not pretty in the australian market.
Very successful in Australia is $2-3 Million annual turnover. About the rate of one store in a good surburban mall.
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Sure, there are many things Australian retailers can do to catch up on the online game, but falling for the Microsoft Surface trick Iain McDonald seems to be doing is quite positively not one of them.
I’ve been through that sales pitch in the UK, we got the MSFT London HQ tour, a few agencies even bought a Surface, but it’s painfully obvious Microsoft is just trying to follow into this space in the hopes of confusing a few over-excited execs. A lovely article from 2007 on the ‘Fine Clothes of a Naked Empire’ still stands today: http://is.gd/9JQbi
The Surface is overpriced, halfway-house technology. Much better to look out to the multi-touch community to see what the leaders and pioneers are doing (at a much cheaper price).
Where Microsoft might go with Project Natal is far more interesting.
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I have been in retail for over 20 years for a $75 million a year turn over furniture retailer. I worked in EVERY division of the company from store person to board member. In those 20 years I also integrated our ecommerce website into the company and developed 13 concept franchise stores using my knowledge of traditional and online retailing to create a unique retailing concept similar to ARGOS is the UK. Combined I was turning over in excess of $7million in sales per year.
I now consult to retailers about how to effectively integrate digital and all the trimmings into their business and use that information to help drive their future success.
Australia is unique, like Rob Payne has said, the biggest issue is logistics and delivery (postal and digital products excluded). Lets not compare ourselves to the UK and the US but listen to what our customers are telling us about their shopping habits here in Australia and integrate those requirements into our day to day operations. By far the biggest thing I see and hear is “browse online, purchase in store” so why fight it, it is what the customer wants.
What retailers have forgotten and i am sorry to say but many Advertising and Marketing agencies don’t and will never be able to understand (because they have never worked in retail) is that a website is more than just a shop front. It is in fact the digital heart of your business.
If your website is constructed correctly and the correct K.P.I’s (key performance indicators) are set up and monitored, your website is actually a portal into the very minds of your customer base. From here you can find out what people like, dislike, how long and how often they look at a particular product and much more, not just what they buy. This information is invaluable in managing your inventory, reducing your slow and dead stock and therefore sharpening your range through the 80/20 rule (80% of your sales come from 20% of your range). That is just the sales side of it though. There is the customer service, PR, Marketing, R&D, Advertising, etc, etc.
All areas of your business can benefit from your customer interactions on your website not just sales, all you need to do is ask the right questions but most importantly understand the data and that is where Advertising and Marketing agencies generally fail as they have limited understanding of a day in the life of a retailer and their customers. They see everything through the eyes of Marketing and Advertising and so they should that is what they do but it is only part of the puzzle.
Like Scott Kilmartin has said who cares if they buy online as long as they buy from you and not your competitor. This article is flawed in that it’s comparing shopping habits with other countries and not recognising that Australia is logistically and geographically different. Based on this we are wrong for eating vegemite and that our national sport is Australian rules Football. We should have our own unique way of determining the value of our online retailing operations that reflect our individuality, what that is exactly I do not know but my opinion is that online is strong and healthy in this country although it is hard to pin point just how much so.
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The maturity of ecommerce in Australia has definitely been held back by the lack of activity by recognised bricks and mortar brands. In the past 8 months Clive Peters and Big Brown Box (Radio Rentals) have gone live with two great solutions. Clive Peters especially realising the benefits of leveraging their in store network with buy online and pick up in store options on checkout. I know of three other very big retailers that will be selling online within the next six months. I think FY11 is the year we will look back at and say that was the year bricks and mortar ecommerce really started to hum.
As for the logistics / demand argument I have to say I disagree. The growth of pure plays such as DealsDirect.com.au, Catchoftheday.com.au and OO.com.au proves the demand for online and they all fulfill in 2-3 days. Officeworks are even doing order before 12 for same day or next day metro delivery.
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Using the argument that Australians are not culturally ready for online retail is not a valid one. The problem is retailers tend to see websites and online as a braodcast channel rather than a transactional one.
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i’ve used Aussie websites like oo.com.au an and the shopping experience has been pretty good and the turnaround very quick (3 days for oo.com.au). we might not have as much selection and user generated reviews as some of the US websites I’ve used.
at the end of the day, i don’t care where i buy from as long I get the a good price, the website is reputable and delivery is quick. I am prepared to wait on delivery if the price is better.
Australians are ready to purchase online and will only increase the number and size of their transactions.
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Advanced technology could change people’s shopping habits. Like ten years ago, how many people bought through online. And now look round, how many people buy their stuff on online, especially from ebay. Ecommerce is broadly defined as it contains b2b, b2c, c2c. New online shopping websites keep arising like http://www.ishoppingonline.com.au. The success point of online shopping websites is not about how advance the technology is, but how the advanced technology to adapt the need from people and improve their shopping experiences. Like what ebay did.
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