OZ Internet Boom? e-Tailers Get “Competitive”
New Frost & Sullivan figures out this week show online accounts for just 7% of total sales for Aussie retailers – compares with around 10 percent in the UK, US.
But 7% is now “quite competitive” on a global basis, ahead of countries like Singapore, Phil Harpur Frost & Sullivan analyst told CN. This is expected to hit 10% by 2017.
Traditionally, Australia lagged US, UK “significantly” in online retail, due to lack of web presence by larger chains such as Myer and David Jones. But this is changing rapidly, says Harpur.
Other reason for online lag is, traditionally, Australia has a strong brick and mortar store presence, due to its highly urbanized population well served by shopping centres and retail stores.
“While there is still a lag with compared to US and UK, the gap has been bridged significantly over the past 3 years due to strong market growth,” says Harpur.
But now, all the majors including Myer, David Jones and Dick Smith are singing the multi channel tune.
Dick Smith CEO Nick Abouud recently revealed ambitions to have Internet sales account for 10% of its total – more than double its current level.
Terry Smart, CEO of JB Hi-Fi, one of the most visited websites in OZ with 1.15 m weekly visitors, says both strong store and online presence are critical – despite the fact its webstore accounts for just 2% of total sales.
Smart said JB’s website is driving instore sales, saying the multichannels “feed off each other”.
Aussie consumers are still going to overseas retailers in massive numbers – the report cited a whopping 33-50 percent of all online spend goes international.
Over the past two years, the proportion of online shoppers buying on local sites only increased from 21% in 2011 to 25% in 2012 and 29% in 2013.
Cheaper prices is the main reason why shoppers look to overseas markets, and the greater variety of goods often available.
|Some larger overseas brands such as ASOS continue to target local markets, says Harpur. This is alongside newcomers like Topshop, offering next day free delivery, returns, cheaper prices, better selection.
But local consumers will shop on local sites in preference to overseas sites only if they provide “the right mix of price, selection and convenience,” warns Harpur.
But at least, the falling dollar may help local online retail in its price war against international rivals.
Online retail sales in Australia will reach more than $18 billion in 2013 and grow 39 percent to $25 billion by 2015, according to Frost & Sullivan.