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Our online retail industry needs to lift its game

The Australian retail industry has a lot of catching up to do to compete with online offerings from the US and UK.

Regardless of whether you walk into a traditional bricks and mortar store or click on a website for the first time, the basics of customer service still apply.

If you can’t find what you’re looking for quickly, chances are you’ll exit the store or shut the webpage faster than you can spell impatient.

The online sales industry climbed 27 percent in the past year compared to the 3.5 percent growth for traditional retail.

According to the November 2012 NAB Online Retail Sales Index, Australians spent $12.6 billion on online retail – equivalent to 5.7 percent of the scale of traditional bricks and mortar retail.

As a single entity, the top 15 online retailers now have a larger turnover than Myer and David Jones and are on a par with retail leader Big W. For these savvy retailers, 72 percent of their sales now come from online.

With shoppers leaving their car in the driveway and turning to their keyboard, online retailers have a huge opportunity to make the customer experience more enjoyable from the moment people visit their website.

An Ernst & Young report into online shopping found that a customer sees the entire experience, including the performance of the site, the delivery and so on, as the product itself.

Much like Australia’s snail-paced uptake of the National Broadband Network, our major department stores have been slow to migrate online. Harvey Norman, insistent for years that online retail would only weaken its store operations, reluctantly launched its online store in November last year – an astonishing 17 years after eCommerce rose to prominence.

The same can be said for department store giant, David Jones, which announced last year that just 4.9 percent of its total sales are through online channels. However, the $1.8 billion company has recently embarked on a new retail strategy that will increase their online offering from 9,000 products to over 90,000.

David Jones’ direct competitor, Myer, has also admitted that its online sales efforts have been below par, with online sales making up a paltry 1 percent of the company’s total net profit. Myer boss Bernie Brookes has vowed to step up his business’ online operations, with a new retail strategy to target 10 percent of total sales by 2016.

In contrast to Australia’s online retail struggles, department stores in the US and UK have been successfully operating in this environment for some time.

For example, John Lewis, a high-end department store in the UK, achieved more than $1.2 billion in sales from its online offering in 2012 – a major addition to its bricks and mortar offering.

An investigation into Australia’s lack of online retail footprint, conducted by Goldman Sachs, suggests that a key contributor is the amount of investment made in technology and online capability. Whilst Australia is allocating pocket-change to technology capital expenditure, the US and UK are allocating significantly larger portions.

It’s not all doom and gloom however, but it is important that Australian businesses start following some important online business practices to ensure that their visitors go to their website – and stay there.

A couple of tips include:

  • Optimising your website for mobile devices. Making page layout and graphics scalable and adaptable to all browsers and devices
  • Search engine optimisation techniques need to be capitalised on. If your customers can’t find you on the first page of Google, they probably won’t find you at all
  • Embrace SMS Australians send 55 million text messages per day, it is the most prominent form of communication in world! Combined with a 98 percent open rate (90 percent within three minutes), it’s the ideal platform for notifying customers that a shipment is on its way or if there has been a delay.

Despite our ground-breaking invention of the ute, the hills-hoist and the bionic ear, Australia isn’t known to be a particularly successful innovator in the vast and compelling online playground. Australian businesses do have some catching up to do, but there is certainly a gap in the marketplace that is awaiting a bold, ambitious business to stand up and grab it.

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Jonathan Morgan

Jonathan Morgan

Jonathan Morgan is the general manager of OpenMarket Australia, a global mobile transaction hub.

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