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.