It is well acknowledged that Australia is playing catchup in the area of ecommerce. While the US and the UK have been steadily building since not long after the year 2000, Australia’s retail ecommerce industry has really only started taking off in the last three years (as an aside, I’m defining “taking off” broadly: a vital and growing number of small retailers, along with advanced offerings from big players.)
Over the last two years Australia has seen the launch of Westfield’s ecommerce offering, Myer join the party and eBay bring to fruition their long held plan to shift to a more retail focus. More recently, David Jones has made bold claims about where its undelivered ecommerce store will end up. Meanwhile, there’s a host of smaller online retailers such as SurfStitch, The Grand Social and My Catwalk that are showing their agility and are proving able to connect with young consumers ready to spend online.
When we compare to the markets in the UK and US, however, we see that the Australia is relatively undeveloped. Retailers are still learning the right way to present and price product, the ins and outs of customer service and how to market their sites. Australia doesn’t have the same pervasive and decades-long mail order culture that the US and UK have, so there are many retailers learning on the run. But regardless of retailer readyness, the consumer is most certainly ready, to the point that Australia has been reported as the third largest market for ASOS’s UK operations (which has led to ASOS opening an Australian operation). Looking internationally, Nordstrom has a sophisticated offering (with reported plans to spend $140 million on ecommerce in 2012), and delivers to Australia. Obviously Australian retailers will not be able to match the investments of larger overseas counterparts, but nevertheless they are competitors with clout, and with orders deliverable to Australian capital cities in a matter of days, the tyranny of distance no longer applies. Australian retailers must find ways of improving their showing, and connecting uniquely with their local market. For instance, Sydney culturally has a beachside lifestyle that Nordstrom and others are unlikely to target.
So, how should Australian retailers respond? Firstly, they need to acknowledge the market and realise the urgency of establishing themselves. The market is proven, and delaying just allows competitors to establish themselves and learn the necessary lessons. Next, the technological platforms must be properly developed. Whether the retailer is large, as with David Jones, or a small pure play online retailer, cutting corners on the technology may hamper growth and addition of new features. Technology selection is an involved topic, and concerns much more than software, with a chief concern being the availability of local expertise. With commitment and technology in place, the next hurdle is either finding ecommerce savvy product and marketing resources, or ingraining a culture of learning and experimentation to be able to rapidly develop and iterate the offering. Ecommerce is changing rapidly, and if retailers are going to be competitive, they need to realise that trying new approaches, failing, and readjusting are crucial.
It’s too early to say who the winners in Australian ecommerce are likely to be, but it is clear that some of the best approaches for the sector have been from the rapidly adapting smaller players, and that the larger retailers can only rely on brand for so long.