E-Commerce 101

Why Australian Retailers Need To Embrace Ecommerce

Australian retailers have been slow to embrace ecommerce until now.  But for most, if not all, time has run out.

Welcome to my new blog series designed to help you get your business making money online.  After all the only reason you would be watching this blog is if you want to make more profits isn't it?

Here in Australia retailers have on the whole been very slow to embrace ecommerce.  There are two major reasons for this.

First and foremost, the biggest retailers in the country have been waging an anti ecommerce campaign for the last decade.They've done this because of their existing investment in Bricks and Mortar retailing.  They are established in shopping centres where they depend on passing traffic from other stores to drive new sales.  As long as surrounding stores remain as bricks and mortar only retailers, these big retailers will continue to get traffic through there doors.

The second major reason is the dominance of franchise chains in Australian retail.  These franchise chains work on a 1990's geographic based model that bars franchisees from having their own websites.

While the economy and retailing in Australia was strong and the Australian dollar relatively weak, participants were able to ignore international trends.  But all that has come to a sudden and painful end.  Today Australian retailers are losing ground to international online stores and have lost their competitive advantage of the exchange rate cushion, perceived risk and speed of delivery.

Exchange Rates

In January 2009 to buy a US$100 product cost AUD$150.  In September 2011 it costs just AUD$94.  Even if Australian retailers are importing the product at a much lower wholesale price, the profit margins have fallen but fixed costs like rent still keep going up.  In fact Sydney, Brisbane and Melbourne are all ranked in the 10 most expensive cities in the world for retail rents.  But if your in retail, I don't need to tell you that do I?

Risk

Its been argued that online, you don't know who you are buying from.  Customers now know that when they purchase a product with Paypal, Paypal gives them a money back guarantee  that they will get what they purchased So buying online is no longer seen as risky.

What about service?

International courier services now mean that delivery from Hong Kong, New York or London to an Australian address takes no longer than an interstate delivery.

So the old arguments against ecommerce just don't stand up.  Even Australia's biggest ecommerce skeptic, Jerry Harvey, has finally given in to reality.  For the past decade he has been telling anyone who will listen that Australians won't buy online and don't want ecommerce.  However, in the last month Harvey Norman has launched their new ecommerce website joining other converted sceptics such as Domayne and David Jones.

Smaller retailers now have two choices if they want to survive.  They can launch themselves into ecommerce to create a second income stream for the business or they can move their businesses 100% online and leave the bricks and mortar retail market altogether.

That may sound drastic but for many retailers it may be the only option they have to survive.

Regardless of the type of business, it is hard to see any retail business that will not benefit from or become dependent on ecommerce over the next few years.
The good news is that there are a broad range of ecommerce options for Australian retailers and they are nowhere near as expensive as they were a few years ago.  When presenting quotes to clients I am often greeted with a response along the lines of “you can do the whole site for that?

In my blog over the next few days I will outline some of the options available and factors that you need to consider when choosing your ecommerce strategy so that you can make the choice that is most profitable for you, because after all that is what you want isn't it?