How is Online Presence going to Help Retailers in Australia?
A vexed question to many traditional retailers in Australia is whether the investment in an online presence with full e commerce capability will have some kind of return on investment. Gerry Harvey of Harvey Norman, one of Australia’s top retailers has continuously said that online retailing is a waste of time and cannot provide the kind of return he is used to from his retail stores. He says that retailers making $300,000 – $400,000 a year online are just wasting his time. David Jones another major retailer attempted to enter the online retailing market in the late 90’s and had to retract from the market to prevent shareholder backlash on poor performance. I think these types of examples have been well publicized and possibly contribute to the slow uptake of online in this country. Other factors one could attribute to the slow uptake are the large distances between major cities, relatively high cost of delivery and a small population relative to the size of the country. There are a few major retail chains and brands that dominate the market and there is just no need in their eyes to pursue an online strategy.
From a usage perspective over 14 million Australians use the web, and in November 2009 according to Nielsen research 46% of all Internet use was on Facebook. GetPrice.com.au a shopping comparison site commissioned some research on pre Christmas shopping behavior and not surprisingly a high percentage of shoppers researched online before buying. Now this is one of the crucial elements that a lot of retailers don’t think about. The value of an online presence to drive customers into stores.
From a different perspective, small to medium sized businesses have attempted to harness online retailing. The top 5 online retailers are all pure play online retailers and are relatively successful. They however are not anywhere near the size of any of the major retailers in Australia. Security and trust online are still a large barrier for many shoppers.
Many shoppers would not feel comfortable paying $1500 to an unknown online retailer for a laptop for example, just in case they never see their money or the laptop. (see this link related to a site that is damaging the reputation of online retail in Australia: http://forums.whirlpool.net.au/forum-replies-archive.cfm/967179.html)
As time moves on we believe that more retailers will develop a web presence with ecommerce capabilities because their customers will demand it. There won’t be a sudden massive increase in online retailers, and at the same time as consumers get more comfortable with buying online the number of online shoppers will steadily increase.
Mark Freidin
Founder
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