Oz E-Stores Go ‘Mass Market’ But Can Retail Catch Up?

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2011 is set to be the turning point for retail and the industry has JB Hi Fi and Gerry Harvey to thank. Well, sort of.

20110407114943a7064 200x200 Oz E Stores Go Mass Market But Can Retail Catch Up?
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The retail mogul is setting a good example, though, believes consultants Bain & Company, who says Harvey Norman’s recent conversion to online selling will encourage others to follow suit.

His recent announcement “is the latest evidence that Australia’s retailers are getting serious about selling online and may “spur other companies (into) playing catch up,” it believes.

And it’s not just Harvey’s that has shown the road to success.

Rivals, JB Hi Fi, is one of Australia’s most successful online retail shops, with “a broad range of products and competitive prices.” The electronics giant has already said it is happy with its online performance.

And Experian Hitwise named its e-store second-most frequented online retailer here, surpassed only by electronic giant Apple.

Since the online market is still “relatively small” retailers have found vast investments directed to online “hard to justify,” say the consultants, since Australians still make less e-purchases than their counterparts in UK or US.

And retailers who still suspect online may not be all it’s cracked up to be in terms of sales potential, stay tuned.

Although in its infancy it is set to sky rocket and online sales overall will treble by 2015, to nearly $30 billion, Morgan Stanley predicts. This will only increase further with the jump in use of Smartphones and mobile tabs.

Bain & Co’s latest survey on consumers indicates the number buying online has doubled in the past year and is reaching ” mass adoption rates” and consumers plan to up their web spend.

 

The survey spanned all ages, incomes and locations throughout Australia.

And according to the consumer trends that emerged,  “expect increased activity in high-penetration categories such as digital content, event tickets, travel, insurance and mobile phones.”

More than half of consumers surveyed had bought digital content.  

And other hot sectors look set to be books, videos or travel services online, clothing and furniture.

So, how can retailers maximise the e-dollar? Forget about the GST campaign, for a start, warns Bain. 

The retailers campaign being referred to was led by industry stalwarts including Solomon Lew, Myers’ Bernie Brooks and Gerry Harvey have sought to put pressure on Canberra to introduce a 10 percent GST on all goods purchased from overseas web sites, claiming it was losing trade to foreign rivals. Gerry Harvey has since backed away from the issue.

“A more serious issue may be the prices that the owners of global brands have come to expect that Australian consumers will pay, and the strong gross margins that (Australian) retailers have come to enjoy.”

This has also been backed up by Productivity Commission’s latest findings that “it appears that even a large reduction in the threshold may not necessarily have a significant impact on the number of parcels not subject to GST and duty.”

More than half of those surveyed by the analysts said they shopped on overseas websites because of the price, and nearly 40 percent said that product selection or availability was the main reason.

 

However, Australians will shop on domestic sites if the price and product is right, Bain says.  77 per cent of those surveyed purchased on Australian websites and just 23 percent on overseas sites last.

However, retailers cant be complacent will need to invest in their online capabilities – and some may need to reduce their prices – if they are to maintain this advantage.

Secure payments and low price were identified as top concerns followed by ease of delivery, convenience while lack of online customer service was the main sticking point.

“Invest in a site that looks good and makes it easy for customers to find what they want, and don’t forget superior customer service online. “

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