Online retail in Australia has not kept up with the rest of the world in its implementation and takeup of ecommerce.
In the USA though, online retail is a $130 Billion a year industry and has grown at 21-26% since 2002. Online searches for online specials for the USA shopping days of “Black Friday” searches, according to Google were both up by more than 50%, year over year.
Searches for “printable coupons” on Thanksgiving and Black Friday were up about 50% over last year and searches for “sales” were up by more than 25%. Google also released a few interesting data points about consumer interest in specific verticals. Searches in the apparel and toys categories rose about 50% and searches in the consumer electronics category more than tripled over last year, with “Black Friday Computer Deals” and “Best Buy Black Friday Deals” also topping the fastest growing search terms during the holiday period.
We already know that the average online purchase was up by 35% and that overall online sales were up 11% from last year.
Akamai is using its Net Usage Index to monitor North American visitors to 270 online retail sites, and according to CNN, data from earlier already points to a 43% traffic jump when compared to last year at the same time.
Below is a graph showing eCommerce websites attracting more than 4 million visitors per minute. As the graph below indicates, however, traffic peaked at 7,666,119 million visitors per minute on November 30,2009 over a 24 hour period.
So why then does Australia seem to lag in terms of the sophistication, availability and advancement of online retail? Why are so many of the big Australian brands recalcitrant? If you look at the major retailers in Australia hardly any of them has taken up any significant online retail presence.
Despite the fact that the Australian market place is projected to grow by 22-25% in 2009, what has been holding the Australian market back?
According to Kineo Consulting (a strategic marketing consultancy) there are several factors
1. Attitudes, expertise and logistics costs have all been contributed to slow uptake
2. Sub-standard broadband speeds and penetration within Australia have been a contributing factor.
3. Population (and our neighbours population) and its contribution to the underlying “viability economics” of ecommerce.
4. Scale and market size -Roughly put – the eCommerce model is built on the concept that build costs are fixed and the margin comes with scale. So whether you are processing a hundred orders a day or a thousand a day – either way its almost going to cost the same to setup a serious eCommerce operation. Amortising this fixed cost is what makes eCommerce worthwhile. With a market 1/15 of the US and 1/3 of the UK (and that’s not counting mainland Europe), you can see why the model of big volume eCommerce has simply not made sense to big Australian brands… yet.
However Kineo sees things changing and changing fast.
- Brands are now realising the true “multiplier” effect that the web has on traditional Retail centre sales. Research from eMarketer indicates that a retailer’s web presence influences its offline sales by a factor of approximately 3.5
- With the increasing uptake of broadband, greater consumer trust in the web and the success of multicategory retailers like Dealsdirect – the bigger brands are beginning to take notice. Suddenly commercial pressure and the economics of eCommerce-with-scale is triggering more moves by the larger brands.
We have certainly seen over the last two to three months several of Australia’s larger retailers approaching us regarding serious eCommerce Projects, as well as an increased build and enquiry rate to design and develop online stores for eCommerce startups.
So do you think e-Commerce is about to grow rapidly in Australia? Would like to hear your thoughts.
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As a computer retailer with a good store front, loyal customer base, and average web presence, have been planning a better quality website for some time now. However, it is difficult when cash flow is reduced due to a flagging economy in recent times. My research into the Australian uptake of ecommerce is somewhat surprising. It seems we Aussies have been the first at the gate with early adoption of techy gadgets. Yet we lag on the Internet. This probably is the poor infrastructure. However, with the likes of TPG offering ADSL2 at $49/month, and the economy bouncing back like a super ball, I think its is all about to change in a dramatic way. I have noticed my competitors are selling more online. Maybe this is why I am selling less in-store.
I am convinced now is the time to invest in growing our online marketing and social media strategy. To the point where all staff job descriptions have been rewritten with an e-marketing orientation.
If I could just get the freaking website finished.
My search for this holy grail has led me to Infinity. You are currently quoting on my brief. I can spend a bit, but not too much just yet. Yet I am here and about to invest everything I have. Yes I think the Australian online market is about to go off.
Absolutely it will take up, but you need professional web designers at a good price for these services and ongoing support and secure buying online facilities to win the trust of buyers purchasing online.
http://www.seahorsejewellery.com.au
I run an online weight loss website and we have definitely noticed a big incease in online sales over the last 12 months. Consumers are becoming more accepting of paying online, as security concerns decrease. We noticed big increases in our conversion rates as we increase security perception around the site.
Usability is also very important. People get frustrated if a site is not making sense, so you also have to make it really easy for them.
Marketing through search engines is also very important for any web business. As SEM continues to increase in cost, we have found SEO to be very beneficial.
http://www.alfitness.com.au
I work for a multinational retailer and setting up a dedicated ecommerce component of the business has been on the cards for some time now. The difficulty we have faced over the past 12 mths is dedicating the resources to this area of the business when the core business is going through some economic times. It is also very difficult to get up to date reliable statistics on consumer spending patterns online in Australia, particularly ones that are industry specific. Stats on the US market are abundant but they can not always be related to the AUS and NZ markets. I think that the huge catalogue / mail order business in the US has definately helped their rapid uptake of online consumerism as it is more of an extension of an already huge segment of the industry. This is something that Australia and New Zealand does not have to progress from.
When the data becomes available, what do we do with it? I know that US, Asian and EU websites that ship internationally have seen a significant uplift in business from the shores of Australia due to the strong AUD. Unfortunately these sites will always be in strong competition with our local e-commerce businesses and in times where the AUD is strong, they will be very tough to compete with with.
It would be good to see some government regulation in this area to help make spending online more attractive locally. This may offer some incentive for local retailers and stand alone e-tailers to move into this category with more urgency.
Talk of online retailing exploding in Australia has been spoken about for some time but until it becomes more attractive for local players we will continue to lag the world in my opinion.
I hope I am proved wrong.
Australia still has no general law protecting personal information. The Australian Law Reform Commission is moving slowwwwwwwwwly on this. Sure the US also lacks, but there privacy seals such as TRUST-e operate. Australia is the only Western country so legally deficient. It mirrors and exacerbates the lack of awareness amongst Australian businesses of the importance of website privacy. E-commerce is about TRUST, actually. Loads of studies demonstrating this. I am a migration agent and many such websites actually solicit information by means of an email enquiry facility yet lack a privacy notice. Incredible. Australia actually has a privacy commissioner but I have never seen reference to him or her in the last year, to drag business out of its privacy torpor.