Bricks And Mortar Business Model Flawed, Says E-tailer

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As retailers experienced their worst recorded falls in sales since the global financial crisis, and the local electronics industry struggles to find ground, one e-tailer claims that the CE industry as a whole is not suffering. Eljo.com.au claims the industry is just shifting from the old to the new as consumers join the ever-growing march towards online retailing.

According to Eljo director, Jonathon Green, Australian online retailing is winning consumers’ vote of confidence on several fronts. These include the pitfalls of purchasing electronics from overseas as highlighted in a news report by eStore CEO, Lorenzo Coppa, which include consumers’ struggles to gain customer service and advice when dealing with overseas online stores, and the fact that local bricks and mortar retailers are operating under an outdated business model.

Green suggests that the fall in retail sales may indicate that the problems faced by Australian bricks and mortar retailers stem from inherent problems with the business model. “Aussie websites operate under the same tax system, and with the same exchange rate as any other company in the country, yet the sector continues to grow,” he says.

According to Green, Coppa’s belief that consumer behaviour is changing is well founded. Australian consumers are becoming more technologically savvy and comfortable buying online. Of particular interest are the changing demographics of today’s online shopper. “Our customer demographic has been trending towards middle class Aussie mums and dads, many of whom are new to shopping online,” suggests Green.

Online payments giant PayPal, via their ‘eCommerce: Secure Insight’ report from Forrester Research and The Leading Edge, expect the Australian online retail sector to reach AU$36.8 billion by 2013, up from a forecasted figure of AU$26.86 billion for calendar year 2010.

 

“Put simply, ours is a 21st century business model which saves money on overheads; savings which are then passed onto the consumer” claims Green. At a time when purses are tightening around the country, it’s no wonder consumers are moving more and more towards online purchasing.

According to Green, the September Quarter was Eljo’s best ever. “2010 so far, on the whole, has been a tremendous year at Eljo. And the Christmas silly season has only just begun!” said Green.

Green said he was happy with the business model the company was working with but would not provide the company’s revenue figures. However, Eljo may face more competition as traditional retailers begin to fight back. Today’s announcement that Myer is to set up an online business operating out of China signals the way forward for several traditional retailers to get a slice of the online market share.

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