SCOPE OF E-COMMERCE IN AUSTRALIA
SUMMARY
Survey data from the Australian Digital Economy E-commerce Trends and Statistics Report* suggests that Australian households are increasingly engaging in online purchasing.Some reports even say that Australia is teetering on the brink of an online shopping explosion.Australians are frequent online shoppers. Three in ten Australians shop online weekly or more often compared to two in ten New Zealanders and one in ten Swiss.
TRENDS
Internet retailing continues to move from strength to strength in Australia as consumers enthusiastically embrace new entrants into the channel. Traditional store-based retailers continue to report weak performance as they struggle to compete against the price advantage that online players enjoy. One reason for this price advantage is the strength of the Australian dollar, which has encouraged consumers to shop at offshore sites. Similarly, internet retailers avoid many of the costs associated with a physical store, such as rent, labour costs and insurance, and are able to pass these savings onto the consumer and offer lower prices.
SLOW UPTAKE OF E-COMMERCEAlmost half of the retailers surveyed in a recent Experian research report suggest having an online sales channel (47%), yet there is a clear reluctance among the remainder to change the current methods and adapt business models to offer consumers the ability to purchase online.
While the reasons for slower e-commerce uptake differ from business to business, Experian’s experience indicates that, in general, there appears to be a reluctance among retailers to divert attention (and budget) away from traditional sales channels that have always performed well.There is a degree of uncertainty, largely based on a shortage of expertise or internal skill sets, and a misconception that leveraging digital channels is expensive and high risk.
COMPETITIVE LANDSCAPE
Global international players continue to lead internet retailing in Australia. EBay Inc and Amazon.com Inc were the largest two players in internet retailing in Australia in 2013. EBay Inc accounted for 18% value share whilst Amazon.com Inc accounted for 17% value share.These sites were quick to establish themselves several years before domestic players made significant investments in establishing online retailing operations.
PROSPECTS
Internet retailing will remain the champion of Australian retailing over the forecast period, with a constant value CAGR of 17% expected between 2013 and 2018. Increased internet penetration, particularly on mobile devices, will be a key source of this growth as consumers become more connected than ever and accessibility to internet retailers grows. Similarly, consumers are more becoming more confident transacting online as their concern for security diminishes. The internet retailing channel offers broad appeal across all demographics due to extensive product ranges, competitive pricing and convenience.
NUMBERS
- Australian e-commerce sales were at $27 billion in 2010 and have reached to the level of more than $37 billion in 2014.Not just that, sales have been continuously demonstrating an increase of $3–4 billion every year. In terms of business, this represents a viable opportunity of revenue generation.
- 73% of Internet users belonging to the age group of 35 to 44 have done shopping online. Australian consumers spent a total of $16 billion online in 2013, while their New Zealand counterparts spent more than $3 billion the same year.
- As the statistics reveal, more than half (53%) of the online purchases by Australians are done on the Australian e-commerce sites. Consumers like to purchase more often from such websites because they are considered reliable local brands.55% of Australians think that online shopping portals offer lower prices, that’s why they are more open to buying things online.
- By the year 2016, the spending is expected to grow in the range of about $27 billion in Australia and $5.37 billion in New Zealand. In addition to that, m-commerce, which is the new face of e-commerce, is going to fuel the increase in spending due to easy accessibility to the online shopping portals via mobile devices. In fact, 57% of online shoppers have spent more using their mobile devices in the past year.
CHALLENGES AND BARRIERS FOR E-COMMERCE
- A traditional mindset-For many larger retailers, it is hard to overcome the “this is the way we’ve always done it” mindset and invest in new ways to drive sales.
- The fear factor-Again mainly affecting larger retailers, there’s the fear that e-commerce could go wrong (made worse by the prevalence of horror stories that highlight the damage done to reputations and brands) and the investment may not pay off.
- Skills gaps-Many retailers still lack the in-house capability to develop and drive online strategies, and rely on a more costly agency model.
- Wait and see approach-Put off by the rapid pace of change, many retailers prefer to see what’s round the corner. Yet this approach will only hold them back — it can be more risky to sit and wait for the next big thing rather than make the most of the e-commerce platforms that are out there right now.
- For the sake of it-Keen to enhance sales, retailers often build a campaign using a new channel because everyone else is. The lack of a clear digital strategy built to support overall business objectives is setting the campaign up to fail, regardless of whether all the above elements are present.
TOP ONLINE RETAILERS IN AUSTRALIA
- BIG W
- BOOKTOPIA
- BRANDS EXCLUSIVE
- CATCH OF THE DAY
- CUDO
- DEALS DIRECT
- DICK SMITH
- GET WINES DIRECT
- GOOD GUYS
- HARVEY NORMAN
Despite the hundreds of millions of dollars thrown at online channels by the likes of department store leaders Myer ,David Jones, both of the nation’s biggest chains are only scraping out around 2 per cent of total sales from their websites.
Both Myer and David Jones released their half-year results and both once again promised their ‘’omni-channel’’ strategy — where the legacy of their bricks and mortar stores is combined with online to create a retail model that straddles both the offline and online world — would get them to 10 per cent.
Bunnings is the seventh most popular retailer in Australia, even though it does not have a transactional e-commerce site for retail customers.
MYER
Myer is Australia’s largest department store group, and a market leader in Australian retailing.
They deal in Retail, Cosmetics, Department store, Accessories, Womenswear, Homewares, Menswear, Entertainment, Childrenswear.
It is a public company founded in 1900 with 10000+ employees.
Website:www.myer.com.au
DAVID JONES
It is a retail brand with 36 stores, two warehouses and a fulfilment centre — offering customers the best international and local brands across fashion, beauty and home.
It is a public company with 5000–10000 employees.
Website:http://www.davidjones.com.au/
BUNNINGS
Bunnings is the leading retailer of home improvement and outdoor living products in Australia and New Zealand and a major supplier to project builders, commercial tradespeople and the housing industry. They have 223 warehouse, 64 smaller format stores, 33 trade centres and three frame and truss centres operating across Australia and New Zealand.
It is a public company with 36,000 employees.
Website:http://www.bunnings.com.au
Unique factors of australia
- The distance and freight costs of shipping product around this country are much higher as compared to countries like U.S, where if you are delivering into New York, you stop your truck at the end of the road and you might do 30 deliveries in one block. If you stop at the end of the road in Australia, you might do one delivery in a suburb.
- Shopping centres are unique in australia from a world point of view. Shopping centres in Australia are full day-out events, they have pubs, clubs, restaurants, off-track betting, all of the above and therefore become a kind of day out and that also makes people less interested in online shopping.
CONCLUSION
It shows many australian retailers are slow to adapt their business strategy to incorporate an online offering.Australian retailers’ adoption of e-commerce strategies is driven more by threat than opportunity.It feels that Australian retail market wants to jump on the online retail business because they do not want to lag behind in sales as compared to their U.S counterparts and not because they need it.Feeling the impact of shoppers’ proclivity to buy from international sites, and feeling the pinch of harsh economic conditions .Home retailers are struggling.
Here are five clear steps for retailers moving forward to integrate online marketing with their existing strategies-
1.Design an integrated cross channel strategy.
2.Become data savvy.
3.Embrace new technology and befriend IT.
4.Do more with the same budget.
5.Start a dialogue with consumers .
BIBLIOGRAPHY
http://www.netregistry.com.au/blog/future-trends-in-the-australian-e-commerce-industry/
http://www.budde.com.au/Research/Australia-Digital-Economy-E-Commerce-Trends-and-Statistics.html
http://www.merlinfx.com.au/e-commerce-booming-business-australia/
http://www.euromonitor.com/internet-retailing-in-australia/report
http://www.rundlemall.com/bm.doc/australian-retail-and-digital-future-2013.pdf
