ONLINE RETAILERS UNDER THREAT

Mark Freidin

11th May 2010

HARVEY SAYS LOCAL RETAILERS UNDER THREAT BY

INTERNATIONAL ONLINE PREDATORS

• Almost half of Australian online spending is going to overseas retailers
• Web retailers encouraged to learn from UK and US counterparts
• Online shopping could reach $75 billion

Australian retailers who are still ignoring the phenomenal power behind online shopping will wake up to disturbing revelations that overseas web retailers are reaping sales from Australian consumers … without even trying.

A staggering 36.8% of web retailers who responded to the recent US-based Internet Retailer survey have revealed that Australia ranks in their top three markets for generating web sales outside of the United States. What is more disturbing is the fact that some of these retailers admitted to winning this business without offering the necessary features and functions designed to cater for international shoppers.

Online Retailer Expo & Conference managing director Mark Harvey says more retailers need to ask themselves why Australian consumers are behaving this way.

“A whole new generation of consumers have taken control and are changing the game for the retail industry,” Harvey says. “With access to a wealth of information online, customers are speaking to us loud and clear by putting their credit cards on the line and transacting.”

Bing Lee head of e-commerce Peter Krideras agrees and says tech-savvy consumers are reluctantly having to benefit international businesses because they were starved of brand choice.
“The delay in Australian retailers embracing selling online has made it easy for overseas ventures to tap into the Australian market,” Krideras says. “The quicker Australian organisations embrace the power of the web, the quicker we can capture this growing market … before we lose more money overseas.”

The online retail sector is booming and so it would seem retailers not offering, or at least considering, an e-commerce channel offering are merely delaying the inevitable – or disinterested in profitability and growth.

Forrester Research has claimed that Australian online spending is expected to grow to a giant $32 billion by 2012, with further evidence to suggest that this could just be the beginning. Figures from IBISWorld show that online sales may eventually reach $75 billion as more retailers increase the efficiency and reliability of their online channels.

However, alarming research by the Australian Payments Clearing Association (APCA) found that in 2005, 86% of our online spend was domestic. By 2008, this had already plummeted to 57%, with close to half of total online sales being directed to overseas competitors.

Global e-commerce leader Martin Newman says as e-commerce evolved globally, there is a golden opportunity to lift the bar and catch up with international competitive standards.

“Benchmark not against competitors, who may be making mistakes, but against best practice,” advises Newman.

“In order to maximise the online opportunities in Australia, it is imperative that retailers look at mature markets, such as the UK and US for insight,” he says. “There is no excuse for any retailer or supplier in

Australia to make the same mistakes, because unlike the US and the UK, they have got very tangible benchmarks in both of these markets.”

According to IBISWorld, Australian online sales currently represent just 5.5 percent of the country’s total retail sales, which is well below levels in the US and UK.

While it is true that the local industry has been slow to catch up with a number of countries in the online retail stakes, there is evidence that momentum is building and more pure-play and multichannel retailers are catching the e-commerce wave.

Harvey says the phenomenal feedback from last year’s Online Retailer conference is a clear indication that the Australian market has a yawning knowledge gap in local e-commerce best practice.

“As the first dedicated event for the internet retailing and e-commerce industry in Australia, we received over 3000 registrations, which led Online Retailer to debut as the second largest online retailing event in the world,” Harvey says.

Returning to Sydney in July, Online Retailer will cover all e-retailing topics from technology, marketing, merchandising and customer experience to website design, fulfilment, operations and revenue growth. Martin Newman in conjunction with 100 experienced e-retailers and e-commerce practitioners will all be sharing their knowledge to help Australian retailers pick up their game.

A highlight at this year’s event will be the results from the first detailed report on the state of Australian online retailing, presented by Patti Freeman-Evans, a research director from Forrester in New York.
“This will be the first time Australian retailers will have significant benchmarking data from which to draw from, marking a significant milestone in the advancement of the industry,” says Harvey.

Another new addition will be the inaugural Online Retail Industry Awards, which has been launched to recognise excellence in e-commerce retailing and is set to build the base for best practice in this region.

“As the more retailers awake to the serious potential of e-commerce, Online Retailer will be the catalyst to ensure online channels become a more integral part in our retailers’ business strategies,” says Harvey.

Event details:

Name: Online Retailer Expo & Conference 2010

Dates: Tuesday, 6 July to Friday 9 July, 2010

Venue: Sydney Convention and Exhibition Centre, Darling Harbour, Sydney

Official website: www.onlineretailer.net