Past neglect costing online sales
- 05 August, 2011 12:14
- Comments 1
Australian bricks and mortar retail chains may have their backs against the wall in the face of cheaper international online offerings, but their general lack of an online presence over the last decade is also to blame.
Online retail sales as a percentage of revenue for the US and UK are significantly higher than in Australia and New Zealand. Indeed, major retailers in these countries, such as JC Penney, now generate as much as 8 per cent of their revenue from online sales.
According to research by PricewaterhouseCoopers (recently rebranded PwC), a key difference is that retailers in major overseas markets have a strong online customer value proposition and have invested substantially in their technology and supply chains.
“Many of the overseas retailers now offer an integrated multi-channel experience that allows customers to seamlessly shop across all channels anytime, anywhere, and on any device,” PwC said.
“Such convergence is leading to multiple channels being used simultaneously. It is no longer one or the other.”
In Australia, PwC expects online shopping expenditure to reach $13.6 billion, a growth of 13 per cent from the $12 billion expenditure in 2010. In contrast to the 8 per cent of revenue enjoyed by some retailers in the US and UK, this equates to 5.5 per cent of total retail sales.
Australian retailers are particularly at risk of losing sales to overseas rivals, with price and access to a broader product range incentivising more consumers to shop internationally. However, PwC found that less than 1 per cent shopped overseas to avoid GST.
PwC estimates that $6 billion will be spent by Australians on overseas websites this year, equating to 44 per cent of total online purchases for 2011 and up a significant 25 per cent over 2010.
Over the next 12 months, 86 per cent of online shoppers surveyed indicated that they would increase or at least maintain their current level of expenditure. For local retailers, PwC says the importance of channel integration is further emphasised when shoppers demand the ability to click and collect and transact in-store via mobile devices and kiosks.
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Comments
Ray
Having recently moved to Australia, my first few experiences of buying online in Australia have been woeful. I have traditionally bought things online for convenience - I can order in the evening, and get things delivered to my home.
Experience Number 1 was to buy a $500 HD recorder from a high street electrical retailer - after 10 days, no delivery, no shipment advice, no customer service. Eventually I called to find out what was going on, and they told me that it hadn't been delivered by their supplier to their central store (in another state) and it could be another 10 days. So I phoned the retailers local store - they had 20 sitting in their stock room, selling at the same price - and they weren't selling very fast.
Experience Number 2 was buying a storage shed. Similar story - four weeks to deliver, no feedback about delays or on broken shipping promises.
Other online shopping experiences with Australian retailers has been equally woeful.
The good online shopping experiences I have had since arriving has been ebay (bought new goods half a dozen times, shipped immediately) and from the UK branch of Amazon - some shipments have arrived within 4 days of placing an order (not sure how they make it that fast!) and, of course, significantly lower pricing.
So I'd agree with this report - it's the retailers shooting themselves in the foot. Poor customer service online is actually driving customers to buy from abroad. 'Price difference' is a handy excuse for retailers to complain about, but until the shopping experience improves, they are going to keep putting people off shopping with them online.
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