What Australian Online Stores Are Still Doing Wrong

All the signs are there that Australian retailers are not investing enough in their online operations. More than $24 billion was spent online during the 12 months to March 2013, with Australian online sales growing by 11.9 per cent compared with general retail growth of just 3.4 per cent.And online retail sales across the entire Asia Pacific region are anticipated to overtake North America in 2013, accounting for a third of global e-commerce revenues. But the growth isn't coming from Australia. It's coming from China.

Sale picture from Shutterstock

Why is it that Australia has so few businesses offering goods and services online, and a retail sector that actively questions the value of online sales? And what makes the big international sites like Gilt.com, Nieman Marcus and ASOS so appealing when compared with local offerings?

Tricks of the online rag trade

There are a series of elements that characterise these successful international sites and that have an impact on the loyalty users have for these online retail brands.

The first is a strong integration with social media, and a highly personalised viewing experience. Rather than abandoning the user to a mercurial search engine and a complex category search, these sites force users to enter via a sign-in process that maintains a "memory" of user preferences and (where relevant) Facebook likes, to generate a featured product viewing experience.

The algorithms, while not perfect, are successful enough that the suggested product experience has a strong correlation with sales of specific goods. And these brands will appear regularly in Facebook advertisements among existing registered customers, further reinforcing the purchasing experience.

Sites like Gilt.com also offer a "try on" facility, where users can adjust a model to their own dimensions to imagine how the goods will look on themselves.

Most items will also be able to be shared through multiple social presences, and in some cases they will be given incentives to share such as a discount on purchase or a loyalty points programme.

The more successful online retailers in the US and UK often deliberately keep limited stock of high-value products, to reinforce the sense of exclusivity. They keep high value, high frequency customers informed of the new availability of stock to encourage competitive shopping.

This invitation-only approach has generated a sense of competitiveness among shoppers to be invited to trial and purchase products ahead of general release, or at a discounted rate.

Gilt.com co-founder Alexis Maybank has described the competitive online customers of the store as "shopping athletes": people who will add their name to a waiting list for a limited-edition gold Starbucks card.

Among Australian businesses selling goods online, a few use some of these usability and incentive-oriented techniques, but use is scattered and often impersonal.

Most Australian online retailers tend to allow shopping without logging in to a site, and they will have limited engagement with their community on social channels. Even if goods can be shared through social channels, the engagement with these social sharing triggers is low. There are few incentives to share and engage with the firm; social is considered an add-on, rather than a deep element of the sales experience.

And VIP programs are limited to the in-store card-based loyalty experiences that fail to differentiate one customer from another. There are no releases for gold-standard customers only, and rather than a sense of exclusivity for products, lack of stock is considered a weakness rather than a strength.

The myths about Australian retailers online

But while these usability and user-oriented differences separate the Australian ecommerce environment from our US and UK competitors, there are other reasons that underlie our spectacularly poor showing in business participation in online sales.

Myth: Local trade laws make trading online difficult

Australian businesses often complain about having to adopt local trade and taxation laws, and say these are difficult to apply online. However, it is easy enough to operate an online business from a specific location and still observe local taxation and trade requirements. The Australian Government has advice on how to operate an ecommerce business.

And the evidence of online sales research is demonstrating that Australian customers are seeking local traders — and are willing to pay additional taxes — in order to get access to their goods more quickly.

The relative ease with which online sales can operate is reflected in the relatively high number of small to medium enterprises that sell online when compared with larger businesses — 58 per cent of SMEs currently sell online and 70 per cent receive online payments.

Half-truth: Australia doesn't have a catalogue buying culture

Australia does not have a history of catalogue sales like the US and UK do, but that hasn't prevented us from becoming active online buyers, with 78 per cent of us buying goods online.

Australians are more than willing to purchase goods that are not dependent on physical parameters — luxury goods like jewellery, handbags and fragrances, as well as ticket products like travel, entertainment tickets.

Contrary to the opinion of traditional retailers, sites like AppliancesOnline have noted that Australians are willing to buy technology, white goods and consumer electronics when their goods can be shipped quickly, cheaply and the online retailer maintains a strong service relationship with the purchaser.

Half-truth: My customers want to shop in store

Shoppers may enjoy the offline shopping experience, but this is no reason to ignore the rise of technology mediated shopping experiences. The rise of mobile device shopping cannot be ignored.

Australian retail organisations have made the shopping experience a part of life in Australia, but even the likes of Westfield have acknowledged that online shopping is something they need to support for people who want a variety of shopping experiences.

The success of international retail brands is through capitalisation of customer desire for personalisation, as well as investment in cost-effective distribution and delivery.

If Australian businesses continue to lag in online shopping investment and customisation, they can hardly complain about loss of business. Ultimately, their pride in customer service is compromised by their resistance to a consumer change that is permanent.

Joanne Jacobs is Adjunct Associate Professor, Creative Industries at Queensland University of Technology. She works for 1000heads P/L, a Word of Mouth Agency that provides advice to firms on use of digital technologies for business purposes.

The ConversationThis article was originally published at The Conversation. Read the original article.


Comments

    Price, availability and customer service. I use to do all my shopping locally. Main reason being I could see and try the products first hand. The store staff would help me with product information and where somewwhat specialist in their field and the prices where reasonable after discount. Also after sales support was amazing. Now, I have to do the product research myself as staff are trained in sales only and not product specialists. I cannot try the product as not available in store and I have to order to buy and not just to try. Availability is always questionable and long waiting periods (weeks). Price is not reasonable as sometimes half the price online and retailers cannot match. After service sale and assistance is horrible.

    In summary the brick and morta store provides me with no benifit over shopping online. Love to shop locally and always have except for the last 5 years. If the above are addressed will be back shopping locally at a drop of a hat and still shop at shops that do provide me with the above even though not many.

    A couple of months ago I was after a particular item and went out of my way to source it from an apparently local source (fishpond.com.au, the only .au site in my search results). They took about two months to deliver. I could have bought it more cheaply and quickly from Amazon.

    I ordered locally specifically for speed of delivery. I wish I could say it's the last time I made that mistake, but I've also had some pretty substantial delays in ordering supposedly in-stock items from bookworld.com.au.

    It would appear that some Aussie retailers really want you to know that buying locally is no guarantee of price or rapid delivery.

    The number one reason i would shop in a brick and mortar store would be for the experience... Unfortunately retailers fail to realize that this is why many shoppers would wander into their stores, this might be why they employ such poor, sullen staff that give every impression that they despise their jobs and anybody that wanders into the stores that they work in... Why would anybody pay more than an online retailer to be subjected to bad service?!?!?

    Yes Aussie retailers are not adopting online sales fast or well. Scale could be a factor, where their overseas competitors can target many countries with their offering. But business sophistication is an area that lags.
    I worked for a decade in major Australian companies getting their online sales channels firing on all cylinders, and these days almost all are sophisticated and highly competitive.
    I then went out freelance consulting for small and medium businesses to give their online businesses a shot in the arm.
    However many small and medium size businesses struggle. There is a DIY mentality for many, or they expect to set up an online presence for a few hundred dollars. Many are stuck in the mode of "just make my site look pretty", rather than applying their entrepreneurial and sales skills to the new medium.
    I am ever optimistic and hopefully Australian businesses get more serious about online retail (or decide to remain purely bricks and mortar if it's too much of a stretch).

    They need to up their game with dispatch/shipping, i tried buying bike parts from a business based in VIC (im in WA) and it would take over 2 weeks to arrive, similar items from the UK took 1 week to come from the other side of the world! explain that?

      Shipping for Aus online stores is a major factor for me. The cost alone often kill off any savings you get from buying online, if you're comparing against similar items OS they're well and truly lost. They should, in theory, have better shipping times, but it does seem a little slow at times, considering the distances travelled.

    I want to Gilt.com (as this article seems to be more about promoting them, instead of showing a wide bredth of examples), my god, that was not a pleasent experience. I couldn't even look at what they were selling without it trying to get my facebook details. Never mind all the interface weirdness of things coming up asking me to do god knows what (that's wonderful, you're shipping to Australia now, I would expect that of any site).

      Requiring Facebook or email before I've decided to make a purchase is a way to get fake details or more likely turn me away. No way real details would be entered prior to wanting to purchase and no way Facebook details would ever be entered.

      Yep. When I'm online shopping I've usually done my research and know what I am buying. I don't need someone to algorithm sale me thanks.

      I also don't think facebook integration and social media presence is a good thing at all. I don't follow stores. My facebook is for socialising, don't try and sell me shit.

    Australian businesses need to manufacture quality goods locally so they can provide good price, fast delivery and locally made items.

    If all they do is shunt goods made OS through their storefront then I am nearly ALWAYS better of sourcing from the country of origin or it's global distribution network.

    Unless it's made locally - you can bank on it being long delivery and overpriced.

    I currently buy a lot of US made clothes which I have researched to ensure they're made in the US and it appears to me that high quality manufacturing can thrive even with western labor costs. Aus has yet to realise this and start the high end manufacturing - Germany totally rule at this and so do some Scandinavian manufacturers.

    "Australian businesses often complain about having to adopt local trade and taxation laws, and say these are difficult to apply online. However, it is easy enough to operate an online business from a specific location and still observe local taxation and trade requirements. The Australian Government has advice on how to operate an ecommerce business."

    Written by somebody who has obviously never had a retail store in Australia. It's impossible to match prices when the retailer in Aus has to pay-
    1. Duty
    2. GST
    3. Insane freight costs
    4. Customs, AQUIS and endless other import costs

    Speed is my selling point for buying locally. If i want something and need it today or tomorrow, I try and get it locally. If i can wait a week or so and save a few dollars, ebay is my first stop.

    If it's any consolation I consulted to a large Aussie retailer to design and implement their digital strategy. What I discovered early on was the lack of platform capability knowhow that most of the all too powerful marketing teams had. Their view was all about 'the brand' and were determined to prevent interoperability, change of supply models, pricing differentiation, loyalty base segmentation, social media management, etc, etc. The worst point was when I presented who were buying stuff from their online stores and I was accused of not knowing their market.

    Data contradicted their 'vision' and it prevented progress. All I ever heard was that they didn't have the resources to manage their online space but claimed to have the plans in place. Naturally, when asked for said plans, none arrived.

    Setting up and running a responsive and flexible online platform is no longer a dark art. There is enough data on basic through to complex models and how to manage them. It's just different and one thing I've noticed having come back to Oz is how resistant those who haven't travelled professionally are to change.

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