Australia Post price increase puts online retailers offside

by Marketing ON 10 April 2013

The online shopping boom is being blamed for the price of postage bags going up, with some products set to increase by up to 30%.

Australia Post is pointing towards difficult business conditions and increasing operational costs for the price hike.

The changes have left online retailers concerned for the financial hit their businesses will have to endure due to the rises. An online petition to has been started on change.org, attracting angry online retailers, and has already been signed by almost 2000 people. The petition states:

“In Australia today many thousands of families rely on income produced through small businesses that operate online. It is not a new phenomenon but it is rapidly growing – well it was.”

The pricing changes came into effect this week.

Australia Post now receives more revenue from parcels than letters, with online shopping accounting for 70% of prepaid packages sent in Australia.

The value of the online shopping market has increased by $2 billion dollars over the past year. NAB’s Online Retail Sales Index found Australia’s annual online retail spending hit $13 billion in the year to January 2013.

The cost of a postage stamp will remain 60 cents.

App-and-mortar economy: Retail apps usage surges 525%

by Marketing ON 14 March 2013

Forget bricks and clicks, as the world becomes more mobile retailers are looking at the reality of an app-and-mortar economy, according to app services firm Flurry.

The US based measurement specialist found time spent in retailer apps grew by 525% during December 2011 and December 2012, in a study of more than 1,800 iOS and Android shopping apps.

Retailer apps indexed well above the general shopping category, which was broken down into five sub-categories: retailer apps, price comparison, purchase assistant, online marketplace and daily deals. Together, these five categories experienced 274% growth throughout the year.

The opportunity for retailers to extend their relationship with consumers outside the store has never been greater, Simon Khalaf of Flurry writes. “In the new mobile app economy, devices are always with you, always on and always connected… In the new app-and-mortar economy, they serve as virtual, portable show rooms that consumers can use to shop anytime, anywhere.”

This growth in retail apps exceeds overall app growth, which came in at 132% over the course of 2012, showing the uptake of retail outpacing general app growth. Time spent in price comparison and purchase assistant apps has grown significantly, up by 247% and 228% respectively. However online marketplace and daily deals apps did not grow as quickly, with 178% and 126% increases respectively.

Retailers saw the greatest increase in share of time spent, which grew from 15% of time spent by consumers in shopping apps in 2011 to 27% by the end of 2012. The enormous growth in retailer app share has come largely at the expense of daily deals, down in share from 20% to 13%, and online marketplace apps, which contracted from 25% to 20%.

This suggests that retailers are beginning to better respond to the tectonic shift created by the collision of online- meeting offline-shopping through mobile apps, Khalaf says

Retailers need to re-examine the consumer relationship from the ground up and through the lens of mobile-first, Khalaf concludes.

Retailers fight off internationals: local multi-channel spend strengthens

by Marketing ON 7 March 2013

Australian retailers have hit back against large international players, outpacing the growth in online sales shown by overseas giants, recent figures show.

Domestic online retail has shown near record growth in recent months, with sales increasing by 28% year on year in January, compared to 25% year on year for international operators, NAB’s Online Retail Sales Index found.

Domestic retailers accounted for 73% of the $13 billion spent online in the year up to January, with the adoption of multi-channel strategies, live inventory management techniques and enhanced stock turnover credited for their strong performance.

Online retail sales rose to an estimated $13 billion across the year and are now equivalent to 5.8% of traditional bricks-and-mortar sales when food retailing is excluded.

Overall, growth for January was unseasonably strong at 27%. Even though January is typically a weaker month for the online sector, 2013 experienced a strong post-Christmas period, NAB group chief economist Alan Oster says.

“Online remains much stronger than traditional retail, up just 0.4% year on year in December 2012, on a non-seasonally adjusted basis,” Oster points out.

Trends in the individual sub-sectors of online retailing remain divergent, with ‘Household Goods & Electronics’ showing above average growth over the past three months, after a long period of underperformance.

‘Auctions, Departments & Fashion’ remained the largest sector, grossing almost half (48%) of online sales. ‘Recreation, Toys and Games’ accounted for 20% of spend, while ‘Groceries, Liquor & Specialised Food’ claimed 13%.

Those aged in their 30s and 40s remain the key demographic for online spending, while Western Australia’s share of spending continues to rise, as the state outpaces the rest of the nation in growth terms.

“It’s clear that our domestic retailers are now fully comprehending the potential of the online retail channel,” the report concludes.

Data Crunch… Retail 2012: Bricks slumped, clicks boomed and caution prevailed

by Marketing ON 8 February 2013

In 2012, Australians spent $256.6 billion offline and $12.8 billion online, illustrating just how small the ecommerce slice of the pie remains (about 5%). But while the balance of spend still sits heavily in offline retail’s favour, it was a tough year for brick-and-mortar specialists, with Christmas spend faltering to end a year in which growth barely eclipsed the inflation rate.

At a number of points throughout the year, growth in online retail sales stood at around 10 times that of traditional retail, leaving the momentum firmly in ecommerce’s court.

Across both however, trend figures show growth stalled in December. Based on seasonally adjusted figures from the ABS, which remove the influence of events like Christmas and variations in each month’s length and composition of trading days, offline sales in December were 0.2% lower than November, and tracked a mere 2.3% higher than the same month in 2011 alongside an inflation rate of 2.2%. Raw ABS figures, however, show that spend in December was 34.7% up on November and 0.8% up on the same period the year prior.

For online retail, which still only accounts for 5.8% of total spend (excluding cafés, restaurants and takeaway food for a like-to-like comparison), the year ended with a return to high growth levels after a dip in the first half of the year, although December, at 23% year-on year-growth, fell below November’s peak. NAB’s Online Retail Sales Index suggests higher spend in November is seasonal in the lead up to Christmas as shoppers buy earlier to ensure parcels arrive in time for 25 December.

Year-on-year growth for traditional retail vs. online retail

Based on seasonally adjusted ABS ‘Retail Trade’ figures and NAB’s ‘Online Retail Sales Index’. The lines show the change compared to the same period in 2011.

The retail sector continues to pin fluctuations on month to month events, such as interest rate cuts, tax hikes, and other news of economic woes. Household budgets were stretched to the limit in the lead up to Christmas, says executive director of the Australian Retailer’s Assocation (ARA), Russell Zimmerman.

“Retailers were hoping the December interest rate cut might have saved the festive season, but the rate cut wasn’t passed on and other cost pressures had accumulated.”

However, how quickly and for how long these events impact on consumer confidence remains unclear. Consumer confidence surveys regularly fail to register upswings in sentiment following news of rate cuts and other alleviating factors, as seen in January’s Westpac-Melbourne Institute ‘Index of Consumer Sentiment’ which stagnated despite news of growth.

Amid the struggling brick-and-mortar landscape, there were winners and losers

Hardest hit throughout the year were household goods retailers and department stores, both of which experienced multiple periods of negative year-on-year growth throughout 2012.

Clothing, footwear and personal accessory retailers also struggled throughout much of the year, apart from a relatively sustained period of strength around the middle of the year.

On the winner’s side sat food and liquor retailing and cafes, restaurants and takeaway food outlets. In December, they closed with year-on-year growth of 4.4% and 5.3% respectively.

Year-on-year growth for offline retail by sector

Note: Figures based year-on-year comparison of seasonally adjusted ABS Retail Trade figures. ‘Other retailing’ not shown on chart.

The spend data reinforces key points both old and new around how people spend.

Muted spend appears to be the new normal, particularly for consumer goods. The cautious mindset of the past few years continues to prevail against news that once would have spurred optimism. Not even the rate cut on December 4 and the stimulant of Christmas could spur the elevated levels of spend in December that retailers hoped for.

But that’s not to say people aren’t spending. Increased spend on restaurants and cafes supports the shift from consumables to experiences, a trend widely discussed over the past few years, as well as more recent reports that Australians are getting out and about again, reversing the long-standing trend towards eating and entertaining at home.

Pinterest to test new look for greater ecommerce referrals

by Marketing ON 31 January 2013

Pinterest is to test a new look in a bid to boost ecommerce referrals and increase engagement on the social scrapbooking site via aided discovery.

The almost-three-year-old social network announced it will soon test an update with a small number of users that features changes to navigation, increased image sizes and more information below each pin.

The update follows the launch of accounts designed for marketers last November, as the site begins to pave the way for brand pages.

Changes have been made to the navigation and search panel of the site, in an effort to make getting around more intuitive. The changes will enhance the image based nature of its search tool, to make searching more visual for users, a feature that Google and Facebook are likely to watch closely as they move to enhance their own social search offerings.

Pins will now be larger and contain more details, including related pins, copy and links to aid discovery and deepen engagement on the site. In December last year, 1.2 million unique Australian visitors accessed the site, spending an average of three minutes and thirty-six seconds per visit, according to figures from Nielsen.

The changes will mean businesses on the social network will need to optimise copy and links attached to pins, adopt a greater focus on platform management and ensure high quality, larger sized images are available, Matt Owen from Econsultancy writes.

“In theory this should deepen the site’s already impressive engagement figures, but for business accounts it means something more important: cross and up-sell opportunities,” Owen says. “By highlighting other content and even users related to an original pin, there’s an increased chance that your account will be found through a users’ organic connections, and a chance to showcase more of your products, services, and even those all-important influencers who already engage with your product.”

When rolled out universally, the changes look set to deepen engagement and boost ecommerce referrals, making the site an even stronger social commerce tool.

Social media to remain a ‘backwater’ sales channel: PwC

by Marketing ON 30 January 2013

Only a tiny minority of online shoppers transact through social media and few are likely to do so in the near future, according to a PwC study, prompting the management consultants to label social a “backwater” sales channel.

The findings come from an 11-country study which aims to debunk ‘myths’ of multichannel retailing. “Recently we’ve noticed that much of the literature on online retail shoppers seizes on a few data points and parlays them into a trend,” PwC’s John Maxwell elaborates in the report.

“Take social media, for example… Consumers use social media to research brands, praise their favourite products and point out the weaknesses of other products.

“But our survey reveals that just 12% of our respondents have purchased an item through a social media site… and only 18% purchased a product as a result of information obtained through a social media site.”

“Social media will for the near future remain a backwater sales channel, if you can call it a sales channel at all,” the report asserts.

However, the report acknowledges that social media is a robust marketing and communications channel for retailers and consumer goods companies.

Around half of respondents say they check social media sites daily, but seven out of 10 online shoppers have never shopped within a social network. That figure is unlikely to lift much in the immediate future, with only around 5% saying they’ll shop more via social media in the next 12 months.

PwC’s report also names ‘showrooming’ – the trend where shoppers visit bricks and mortar stores to view products before buying online – the ‘home turf’ advantage of domestic retailers, the domination of global giants and price as the primary driver of store choice as ideas that warrant reconsideration.

PwC’s ‘Demystifying the online shopper: 10 myths of multichannel retailing’ was conducted among 11,000 consumers from Brazil, Canada, China, France, Germany, the Netherlands, Russia, Switzerland, Turkey, the United Kingdom and the United States.

Infographic: The ups and downs of retail in 2012

by Marketing ON 20 December 2012

Earlier in the year, we tracked the ups and downs of online retail against ‘traditional’ retail in the infographic below.

2012 was a year of fluctuations for online retail, with growth peaking near 30% in February then dropping to below 20% in April, before recovering to 25% in July. The last recorded data from NAB’s Online Retail Sales Index, collected in October (after this graphic was published), growth was steady at 26%.

In contrast offline retail sales growth languished at sub-5% levels all year, with some months recording decreases. In November, the more recent run of ABS retail trade figures, there was no change in sales month on month.

While much has been made of the threat online retail, in particular overseas operators, poses to traditional retailers, the vast majority of sales (94.7% in July) still goes through brick-and-mortar outlets. And international retailers only claimed 28% of online sales, as local online players dominate the space. After a spurt in mid 2011, growth for international retailers dropped below that of local operators, where it remained for much of 2012.

Online shoppers spent the lion’s share of their outlay on auction sites, department stores and fashion retailers throughout the year. In July, toys and media retailers were the second largest segment of the online markets, while household goods and electronics was the third largest.

Tellingly, as of earlier in the year, if the top 15 online retailers in Australia were a single entity, they’d be bigger than Myer and David Jones and almost on par with department store market leader Big W, according to analysis from data analytics firm Quantium.

Click image to embiggen.

Online sales gallop towards Christmas after mid-year lull

by Marketing ON 30 November 2012

The rate of growth in online sales strengthened over the last six months, to log 26% year-on-year growth in October, according to NAB’s Online Retail Sales Index.

Australians spent $12.3 billion online for the year to October, which accounted for around 5.6% of total retail spend, showing the vast majority of shopping is still conducted offline.

However, the growth rate of online retail spend once again far outweighed that recorded by traditional retail which grew a paltry 2.2% in September (3.6% when food retailing is included), according to the most recent ABS retail trade figures.

NAB’s most recent figures represent somewhat of a rebound for online sales, following a slowdown in the early part of 2012. The rebound was driven by domestic players, group chief economist for NAB, Alan Oyster says.

“Domestic retailers have been the dominant players in the online space, accounting for almost three-quarters of sales in the year to October.”

Domestic sales increased by 28% year on year for the month, while international sales increased by 22% year on year.

Around half of all online purchases were made through auction, department store, fashion, cosmetic or variety store retailers. ‘Recreation, toys, games, hobbies, music, movies and books’ was the second largest of the study’s broad categories, accounting for 21% of sales. ‘Home, furniture, appliances and electronics’ followed with 19% of sales while ‘groceries, liquor and specialised food’ brought up the rear with 13% of sales.

In October, sales growth for food and beverages and the department store and fashion category jumped, growth in toys and media slowed, and the household goods and electronics declined.

Director at research firm Quantium, Tony Davis, predicts retailers will innovate as the online landscapes changes. One sector which continues to go through shifts is the group buying market. “The group buying sector of online continues to see rapid decline, but we are bound to see other new online formats emerge,” Davis says.

Quantium pieces together the online retail figures by extrapolating the spend of NAB credit card holders to the overall population.

Those aged in their 30s and 40s remain the key demographic for online spending, with the under 30s age group lagging behind on a per capita basis.

How to survive a click frenzy

by Stephen Foxworthy ON 23 November 2012

The other night the ClickFrenzy Australian online retail promotion kicked off at 7pm. It was supposed to be the first coordinated online retail event Australia has seen and the organisers did a great job of signing up some of the highest profile Australian retailers, generating buzz and PR to support the event with mainstream media coverage and a lot of pre-event hype. Everything was in place for the largest online sales event to hit these shores.

But almost instantly it turned into a PR disaster, with the event site crashing under the load of visitors and many retailers who were participating also crashing under the load. Myer, David Jones, Kogan and Dick Smith all experienced outages at the height of the frenzy.

Twitter erupted immediately with the hashtag #ClickFail trending as consumers took to social media to howl about their experience.

So what went wrong?

For any retailer looking to maximise the value of a major sales promotion such as ClickFrenzy, preparation and planning for the increased traffic such a promotion can generate is paramount.

Ecommerce is complicated, with a fine balance between advertising and marketing, usability and user experience design, web development, software platforms, integration with third-party systems and hosting infrastructure all needing to be tuned to ensure optimum performance.

What the #ClickFail experience demonstrates is that while many Australian retailers are desperate to latch onto a sales promotion to drive traffic and sales, they do not yet see online sales as mission critical, and have not invested in the skills, infrastructure and preparation time to ensure that sudden spikes in traffic can be safely accommodated.

The interest generated by the promotion was unprecedented, and many commentators are now trying to justify the failure of their online stores as a positive: “So much traffic our servers couldn’t cope with demand!.” However, for any consumers who have experienced such a failure, the damage to a retailer’s brand could be terminal. Retail is fast evolving into an ‘omnichannel’ experience for shoppers, who now expect to be able to shop online, in store and on mobile devices.

The organisers had chosen a platform and approach that has known limitations (the Magento ecommerce platform is well known to have server and infrastructure demands that need to be carefully managed at scale) and the failure to predict and manage the immense interest and demand was a failure of both planning and technology.

How can retailers survive a click frenzy?

In preparation for a frenzy of clicks, companies should put in place a number of measures to ensure they can maximise the value of the promotion. There are lessons every retailer can learn from this experience:

Advanced notice and information: give your service providers as much notice and information regarding any traffic spikes/marketing campaigns in advance as possible. This will allow for planning, implementation and testing of any network enhancements or website optimisations,
optimise your database: watch the database during normal site operation and identify any ‘expensive’ queries that use a lot of CPU time or require a high number of database reads to complete their tasks. Once identified, either rework the query to run more optimally or setup indexes on the table to reduce database reads,
monitor your website: all mission-critical websites should be monitored 24/7. Monitoring will let you know if something is wrong with your site and also how fast pages are taking to load – if you make changes to your site and during different visitor loads you will be able to gauge how it has affected performance, and
set up a content delivery network (CDN): one of the best ways to ensure optimal Web site performance under load is to setup a CDN. CDNs work by caching your website on servers located in different geographical locations, on different ISPs’ networks. This results in faster delivery of your website and a reduction in the load on your server and network.

So what happens now?

Now it’s time for Australian retailers to get serious about their online retail operations. Marketing and promotion are just one part of the retail puzzle. Execution and optimisation is equally as important. As is service and logistics.

It’s quite obvious now that Australian consumers are ready to buy online, and next year it’s likely a ‘ClickFrenzy’ event will be orchestrated by retailers themselves, using their own media reach and loyalty programs, as opposed to paying a third party.

To maximise on these sorts of retail events, online retailers need to seriously review and test their online infrastructure, load test and optimise their platforms and plan well ahead for the spikes in traffic and sales that an event such as ClickFrenzy can generate if their websites can cope!

Pinterest paves way for brand pages, launches features for marketers

by Marketing ON 22 November 2012

Pinterest has started paving the way for brand pages by launching accounts designed for marketers.

The social scrapbooking site launched accounts that allow marketers to sign up using business names (rather than requiring a first and last name) and verify websites last week.

While the pages themselves are no different to the current page layout, the move signals the social network is ready to work more closely with brands and includes the launch of ‘pin it’, ‘follow’ and featured content widget options for third-party sites as part of the sign up process.

A business microsite displaying case studies from brands like Etsy and Jetsetter, as well as best practices and guidelines for brands, has also been launched. Its terms of service have also been updated to include businesses.

Product manager at Pinterest, Cat Lee, played down the launch of the business features, telling Mashable they have nothing to do with monetisation or [Pinterest's] business model. “We know that when we do introduce a business model, we definitely want to design it in a way that makes the user experience better, but this announcement is just about taking that first step,” she said.

Companies that already have a personal account on Pinterest will be able to convert it to a business account free of charge.

The company raised $100 million in funding and was valued at $1.5 billion valuation in May, according to Mashable. Its hired several ex-Facebook staffers, including head of operations Don Faul and head of product management and partnerships Tim Kendall, who once directed Facebook’s monetisation strategy.

Botched Click Frenzy sale event – advertisers ask for refund

by Marketing ON 21 November 2012

Retailers who advertised on last night’s botched sales event site, Click Frenzy, have begun to ask for refunds.

According to news.com.au, many of the advertisers who collectively spent over $1 million on the discount event have requested refunds after the site crashed for several hours upon launch.

The event has been widely panned as a failure, sparking the hashtag #clickfail, after it went down for several hours soon after the sales began at 7pm last night. Several of the retailers who had listed deals on the site, including Myer, Dick Smith, Jeans West, Katies, Quicksilver, Kogan and Harvey Norman experienced service difficulties on their own sites as the traffic was directed through from Click Frenzy.

SmartCompany estimates that some companies spent more than $50,000 and close to $100,000 advertising on the site, through a combination of paid listings, featured content and banner ad placements. Almost 200 retailers took part, according to SmartCompany, with each paying a basic set-up and listing cost of $1,500 plus GST, bringing revenues from that alone to over $295,500.

Director of Click Frenzy Grant Arnott from Power Retail says the “tsunami like” wave of consumer interest in the event was unprecedented. “We had a million and a half to two million querying the site within the first few minutes of the sale.” The sites systems were only equipped to handle one million visitors.

But despite Arnott’s assurances the shopping portal had returned to “full service” from 10pm last night, Click Frenzy continued to experience troubles throughout the day.

Many involved in the sale have today expressed their discontent with the site’s crash. Adore Beauty chief executive Kate Morris told SmartCompany she hasn’t recouped her advertisings costs, and is “extremely disappointed” with how the sale went.

However, not all retailers involved were disappointed with the results. Cofounder of eyewear retailers Sneaking Duck, Michael Fox, says yesterday was the best traffic day in the online retailer’s history and the 24-hour period (Click Frenzy ends at 7pm tonight) should see record sales.

“One of the big issues it highlights is that Australian online retailers need to improve their technology platforms,” Fox writes on his blog.

Joe Barber, founder of Modapt, which helps sites tailor to meet high demand, agrees with Fox’s sentiments. “Website technologies have simply failed to address the staggering increase in demand,” he says. “Instead of focusing on performance and the ability to handle large volumes of traffic, existing technologies have focused on catering to the needs of developers, who are under pressure to deliver more and more features to their clients.”

Arnott defended yesterday’s crash, saying it wasn’t so much a failure so much as a “dramatic starting point”. He predicts next year’s event will be “simply amazing”.

‘Storytailing’ marries magazines and mobile for online fashion retailer The Iconic

by Marketing ON 19 November 2012

Australian online fashion retailer The Iconic will publish a quarterly print magazine that allows readers to shop straight from its pages using their smartphones.

The quarterly title will be published by Pacific Magazines’ custom publishing business, Pacific+, using its ‘Genie’ technology, which directs readers to mobile shopping portals when products are scanned by a mobile device, The Australian reports.

The move will be one of the most pervasive examples of ‘storytailing’, a trend being championed by the fashion industry whereby retailers use product ranges to create fashion content, from a local retailer. Global online retailer ASOS introduced a similar ‘scan to buy’ interface in its custom magazine in August.

Magazines continue to be powerful sales tools for the fashion industry, and are a medium The Iconic is confident putting its trust in, managing director of the pure-play etailer, Finn Age Haensel said. “So it’s important for us to have a printed magazine as a powerful sales tool that inspires fashion and speaks to our audience,” told The Australian.

The first issue of the The Iconic will be mailed to the retailer’s database of customers and made available online from Friday. At 100-pages long, the print run is reported to be 100,000 copies for the first edition.

Pacific+ is understood to have beaten ACP Magazines, newly acquired by Bauer Media Group, in a competitive pitch.

Pacific’s Genie ‘action code’ reader launched in June and has been used it in a range of titles, including Home Beautiful, Who and Marie Claire. ACP also offers scan to buy technology.