Australia’s geographic isolation has for a long time kept retailers insulated from international competition, but with the increasing ubiquity of online shopping and product research by consumers, durable product sectors such as clothing and electronics are losing more and more sales to overseas competition.
That is one of the findings detailed in the latest report from marketing strategy firm eMarketingConnected’s study into the state of Australia’s biggest retailers activities online. The report, titled ‘Beyond the basics – Why the largest Australian retailers are losing the online battle’, examines the online habits of 62 of Australia’s biggest retailers across across the clothing and accessories, household goods, department stores and the food sectors. Specifically it looked at four key online areas – websites, social media, email and online CRM, and in-store integration – and found this country’s biggest retailers to be lacking in general. Marketing spoke with eMarketingConnected’s director, Peter Paterson, to find out more.
Figures from PriceWaterhouseCoopers show 44% of all online retail sales will go to overseas sites this year, a rise from 40% last year. “Australians by their nature like to shop with Australian retailers [but] due to the fact they can’t always get what they’re looking for that drives them to use overseas retailers,” says Paterson. And that should come as a wake-up call for our big retailers. “If they don’t address that and try to catch up they will only be left further behind.”
The situation has arisen due mainly to the perception of online retailing as a threat, rather than an opportunity, to traditional retail stores. “When they talk about online, there’s a lot of talk about price and price competition,” Paterson explains. Large Australian retailers haven’t picked up on the opportunities to use engaging online tools that can drive traffic in store and leverage their existing physical assets online. What has happened instead is that retailers think they are obliged to be online as a competitor to overseas and online-only retailers.
Due to this reluctance, smaller retailers are experiencing a lack of leadership, but this shouldn’t necessarily be seen as a problem, rather an opportunity. Paterson gives the example of direct, online-only electrical retailer Kogan, which has seen such success it has expanded into international markets. And Paterson says this is not just because of Kogan’s particular business model. Another example is Styletread.com.au, a designer footwear retailer with a very clear value proposition: free delivery and free returns in a limited period if you’re not happy with the purchase. Paterson notes that they have learned from companies doing well overseas and applied their thinking here.
The report in general paints a fairly grim picture, but that also means there is room for improvement. Of the two in three retailers studied that are selling online, the majority are doing the bare minimum when it comes to personal communication, social engagement and collecting customer data. Of those, one in three are using some of the more advanced selling tools such as user reviews and video. The issue is consistency. “What we did find is that it was quite inconsistent, so some retailers are doing good things but there’s probably not one retailer who’s doing absolutely everything that they could.”
On a sector-wide scale, electrical retailers are using informative and technical tools like user reviews and in-store integration well.
Another example is Dick Smith Electronics, whose ‘Click and collect’ function lets customers browsing products online to reserve the product and then pick it up at their local store. Additionally, Bing Lee utilises online chat in support of its ‘Everything’s negotiable’ slogan, through which customers can negotiate a price online.
Peterson concludes, “There are examples of retailers who are doing some things and are pushing the boundaries… the numbers of those retailers is in the minority.”