Opinion

When it comes to online shopping, Australia’s consumers are 15 years ahead of our retailers

In this guest post, Simon van Wyk argues that this Christmas was the one where shoppers finally shifted online.

It’s amusing to see the country’s biggest retailers on TV pleading their case for a GST on imports and talking about Australian workers and jobs. After decades of sourcing the lowest possible manufacturing prices from India, China, and Vietnam, we have to defend Australian jobs by paying GST on our overseas Internet purchases under $1000.

Now while these observations are a pretty cruel sport for those of us in the industry, there is something more important happening here and it’s important for the entire marketing and advertising industry.

Back in 1995 when we started HotHouse, we toured the Internet seminars and everyone was saying the same thing: The world would never be the same again and if you weren’t online, you’d soon cease to exist. Apart from a few companies such as Encyclopedia Britannica, this really didn’t come true. Some industries changed, but after an initial period where start-ups scared traditional retailers with the size of their initial IPOs, the powerful big companies largely managed to maintain their position despite the entrance of a few Internet start-ups in every category.

However this recent retail issue is quite different. In my opinion it’s not about price or GST, although that is part of the equation. Yes you can generally buy offshore for a lot more than 10% off the local Australian price, so even when you factor in freight and the 10% you’re still better off. What’s it about? Well in my opinion it’s about a fundamental change in consumer behaviour.

Internet banking started 12 or so years ago and as we adopted Internet banking we subtly learned a lot of quite complex things. We learned that the Internet could be secure but it could also be insecure. We learned to navigate complex functionality and we learned that it’s much easier to do some things online than in a branch.

Most people’s first e-commerce experience was with Amazon. Amazon took on a product category many people said was doomed to fail. After all, we loved books and bookshops. However, Amazon offered millions of titles and levels of customer experience that improved on the in-store experience. Reviews, lists, other items bought by people who bought this book, etc. all added to the experience. So Amazon helped people get started with online buying.

Fifteen years later, many people are used to buying online. They know the range is better, they know the experience is better and simple things like “Choose carefully because if you change your mind you won’t get a refund” don’t exist.

These models have now matured over a long period of time and regardless of the category it’s often better to buy online than in a store – so guess what, we’re shopping online. My random survey of the shopping behaviour on Sydney’s North Shore (conducted, admittedly unscientifically, at the dog park) says most people were buying some, if not all, of their presents online.

We’ve worked out that we don’t need shops when we can buy online and we’ve worked out that we don’t need advertising because we can now find anything we want. For the first time, we’re seeing mainstream campaigns that drive no incremental search or web traffic. That’s a first. You can spend millions on TV and not see anything in your search or traffic stats. Why? Because everyone who might be interested in your product is already looking for it and they’re not hanging around long enough to see the commercial in the ad break.

I think 2010 was the year retailers finally realised the Internet was a harbinger of a change to their business and it’ll be 2011 where the same impact is felt across the marketing and advertising business.

The moaning from the retailers is silly. The threat to build stores in China fails to recognize most retailers have missed out on 15 years of learning and there is no way to get that back. It’s not about the Internet – it’s about a 15-year change in the behaviour of consumers and if you’re not ready now, you probably won’t catch up.

  • Simon van Wyk, is MD of digital agency HotHouse
ADVERTISEMENT

Get the latest media and marketing industry news (and views) direct to your inbox.

Sign up to the free Mumbrella newsletter now.

 

SUBSCRIBE

Sign up to our free daily update to get the latest in media and marketing.