Local retailers are increasingly seen as being in direct competition with online shopping. Tradr, based in Australia, recently saw our 2011 Christmas shopping numbers down.
Why? Here’s one of the reasons
He had brought a pair of sunglasses over the internet for $130 delivered from the US, when the same pair cost $330 in stores in Australia. These aren’t small discounts. You can buy from the US and the UK at 50, 60 or 70 per cent cheaper than you can buy here.
More consumers are being frugal in this (post) GFC world, is coming at a cost to the local retail business?
Is Aussie Online Shopping Really Growing?
In 2011, independent research found that the online shopping industry had a revenue turnover of $9,422.2 million in 2011 and has forecasted it will grow 10.2 per cent to $10,403.5 million – representing about 5 per cent of the total retail sector. Growing from just $7 billion in 2007, the industry has experienced significant growth over the past five years.
Why is there a growth in online shopping?
- Websites are less expensive to setup then a physical retail, with less overheads online only shops can deliver the same product for a lower price.
- You can shop from the comfort and privacy of your own home. It is especially convenient if you have kids, you can window shop with a friend, there are also no crowds or pushy salespeople.
- Comparison shopping is convenient – there are at least a hundred sites that compare offers from different suppliers. Instead of travelling from store to store shoppers can do this with one site.
- More variety is available as an online shoppers has potentially all the products in the world at their fingertips. There is no way a local retail can stock all goods.
- The internet shops are open 24 hours 7 days a week. The customer can shop when it suits them.
Well, at Least the Aussie Post Office is Profiting
“Seventy per cent of our parcel business is generated through e-commerce,” Mr Mortimer said. “The parcel business is growing quite rapidly… The increase has been quite dramatic. It is a completely different way of doing business.”
Hang On, So how much is spent online?
In the US, recent stats from StatisticBrain found the last 4 years of total money spent to be steady:
In the UK, IMRG statistics show:
- The UK is Europe’s leading e-retail economy, with sales estimated to reach €81bn in 2011
- Global e-retail sales increased by almost 25% to €591bn in 2010
- The UK e-retail market is currently growing at 16% per annum, in spite of the recession
- e-Retail contributed 9.4% of total retail sales in May 2011 (excluding automotive fuel): source ONS
- The UK’s per capita spend of €1333 per annum is the highest in the world
- The digital commerce market provides employment for over 730,000 people in the UK
- 37 million people shop online in the UK
- More than one billion parcels are shipped from online purchases each year in the UK
How much did Australians spend online in 2011?
For 2012, PayPal Australia forecasts the country’s online retail industry would grow by 40 per cent to a turnover of $33.8 billion from $24 billion in 2011.
That’s $24 billion in 2011 !
Other sources believe revenues are a lot lower, as per the independent research at the top of this post: $9.422 billion – representing about 5 per cent of the total retail sector.
Growing from just $7 billion in 2007, the industry has experienced significant growth over the past five years.
Who is the typical Australian online shopper?
Internet users aged 35-44 years were more likely to have shopped online than any other age group (73 per cent). Government ACMA Survey
What do they do? A 2010 IBM Survey of 2,599 Aussie consumers found:
- 92 percent want to use websites to compare prices
- 76 percent want to use websites to access and print coupons
- 75 percent want to use mobile phones to find out where the nearest store is located
- 70 percent want to see what goods are in stock before going into the store
What is Local Bricks & Mortar Retail doing?
Australian retail trade at current prices was unchanged in November at a seasonally adjusted $20.933 billion, compared to $20.927 billion in October, the Australian Bureau of Statistics (ABS) said on Monday. Economists had forecast a rise of 0.3 per cent for the month. According to the Perth now website and the latest released stats from the ABS.
The value of the retail industry’s contribution to the Australian economy with turnover at $242 billion. Government Productivity Commission Report
So are there any bad points about Online Shopping?
In Australia, it is a common practice for expensive internationally shipped items from some regions to be marked as gifts, samples, or declared with a low value – to avoid the $1000 GST threshold that applies in Australia. Packages that exceed this threshold require an additional 10 per cent goods and services duty payment on the value of the items, as well as Customs processing fees, before being released to the purchaser.
- Customs is cracking down on this unfair practice, tax evasion, with an increase in confiscated items.
- Bad online experiences – poor site navigation, not enough product details, no product zoom or photos, shopping cart glitches, slow load times, browser not supported, flash not supported, too many pages until checkout.
- Dodgy websites setup for credit card scams.
- Sometimes you miss the courier, you go to the post office and the parcel is not there!
How Local Businesses can Benefit the Customer?
- One of the things that retail does deliver, it delivers the goods immediately. ABC
- A local business can give you (that you cannot get online) is that personal touch — that hands-on, feel it, see it, smell it, taste it, hear it experience. ABC
- A genuinely knowledgeable, helpful, friendly customer service person.
Tips for the Bricks and Mortar Retailer
- Bricks and mortar retailers should concentrate on improving their customer service and knowledge of the products they sell. The Age
- Retailers will have to re-invent themselves and look for collaboration with other businesses to expand their offering. ABC
- It is vital for business operators to adapt to new technologies. “You just can’t expect people to keep walking through the door,” … “Retail chains kicking goals at the moment are those who have adapted and are using social media.” advised Multicomm retail expert. Standard News
From the consumers’ eyes, the top areas of improvement for retailers were around delivering customised promotions following by having knowledgeable staff and store employees willing to help in the shopping process (customer service). The good news is that 54 percent of respondents said they would spend more with a retailer if they got these two areas right. Internet Retailing
“We are in a shopper’s market today, because consumer access to technology and information gives them all the power,” said Ian Wong, ANZ Retail Industry Leader, IBM Global Business Services. “Retailers cannot afford to sit still as this digital revolution happens. They must engage plugged-in consumers in new and different ways, on their terms, and with more bi-directional feedback and dialogue.”
What Tradr Believes In
Here at Tradr we believe that small businesses should use a hybrid commerce strategy.
The goal – to create a seamless experience between offline and online. Every physical product in your store, needs to be supplements by its online counterpart. Setup an online store, to sell products and market your products. Engage the customer online, when they conduct product research, then allow them a streamlined purchasing solution to your shop.
Online Shopping vs Local Retailers – Is it Warfare? No, not really. Technology seamlessly integrating itself into everyone’s life. So use everything at your fingertips.
In the end, local businesses provide goods and services immediately and easily, with customer service, and in bricks and mortar retail experience. Online shopping can be convenient, cheaper and provide more range of products. Both online and offline shopping has it’s benefits – so hit the customer from both sides. Tradr hopes to streamline this, for small business, so they can compete using a hybrid commerce strategy.
How Tradr is Helping the Small Business
We provide affordable online stores, that are called Pro Shops. Free hosting, affordable fees ($6 month), choose your own domain and with multiple themes to choose from.
Marketing – We help market your individual products in our Product Directory. You can engage with shoppers directly for your respective products. Simply post advice, info, and answers – then link to your existing commerce site. In the future you can look forward to a Business Directory and locality based promotions.
We also provide a blog about helping small businesses get online titled, How to Social Commerce!
Here’s to your business success! 🙂