From retail to e-tail: lessons from overseas

From retail to e-tail: lessons from overseas
Published: 
January 2014

Australian retailers are losing out in the competition for online sales, as consumers now spend more money with overseas websites than those from home-grown companies. Here are some lessons retailers could learn from their foreign competitors.

The week-long closure of Myer’s online store during the post-Christmas sales period not only cost the company an estimated $1 million – it also further damaged the credibility of the country’s online retailers.

While Australians are amongst the world’s top digital consumers, with over 50 per cent preferring to buy online where possible, home-grown retailers appear to be lagging behind. Only 30 per cent of retail businesses transact online, according to the Australian Retail Association, and those that do often lack the sophistication of online retailers in the US and Europe.

Poor quality websites, together with GST on sales and higher costs in general, put Australian retailers at a disadvantage when competing against companies from overseas, many of whom are honing in on the market by setting up dedicated Australian sites or offering flat-rate shipping ot Australia.

Associate Professor Marta Indulska, a specialist in IT and online retail at UQ Business School, says: “Australian department stores got a late start in online retail and that still shows. Some still don’t understand how much capacity they need to service website traffic, and their websites have fewer features, fewer options for personalization and make less use of recommendations – where retailers suggest items based on their previous buying behavior.”

Here are some lessons that Australian retailers can learn from other countries:

  • Shout about your store

The UK fashion house Boohoo.com is one of a number of UK brands including Topshop and ASOS which have established a reputation for offering cutting edge fashion at affordable prices. Boohoo launched in Australia in autumn 2013 with a hard-hitting marketing campaign and within months had become one of the country’s six ‘most shopped’ stores. PR manager Katie Curran says: “We were probably the only fashion company advertising on TV. We also advertised in print magazines and on radio. We introduced dedicated social media channels and tailored our magazine to suit the market. We really shouted about our brand.”

  • Ensure it is mobile friendly

Many Australian online stores are still not easy to use on mobiles and tablets, despite the large number of consumers who use them. In the UK, mobile sales – often from consumers shopping in the evenings while watching TV – have been credited with helping to turn around the fortunes of embattled retailers.

  • Think multichannel

Whereas online stores were once seen as ‘the competition’ by traditional retailers and later as a support channel, they have now become an integral part of the retail operation. For example, customers can go online to check the availability of products in store or order online and collect in store. However stores need to operate in tandem with the website and share the same branding to ensure a consistent customer experience.

  • From clicks to bricks

While traditional retailers are going online, some online retailers are opening on the high street. Initially this may be to provide a location where customers can view bulky products like furniture but may result in a chain of stores given sufficient demand. “Online stores can also be seen as the modern equivalent of market stalls for companies just starting out,” adds Associate Professor Indulska. “They offer the option to set up and trial a concept or product range at a relatively low cost, and with global reach, before a more significant investment is made in adding a bricks and mortar channel .”

  • Improve customer service

In the US and other countries, online retailers have become adept at building relationships with customers through social media and even telephone calls. Websites also offer more options for customer service including avatars and real-life assistants behind the scenes who can answer queries via social media or instant messaging and step in to offer help where customers appear to be having problems.

With online sites being heavily dependent on online reviews, many will go the extra mile to keep customers happy. One operations manager at a large UK retailer recalls how, when a customer returned a hand-made product, demanding an exchange for ‘the one in the picture’, she had staff search through hundreds of items in the warehouses to find the closest match.

  • More delivery options

Overseas retailers tend to offer a wider range of delivery options, including free delivery, and many will be offering faster deliveries in 2014. In Sydney, The Iconic is taking the lead by offering three-hour delivery within the city for $9.95. Click and collect is increasingly popular and customers often make additional purchases when they call in to collect their order. Retailers are making returns easier too by including a printed returns label along with the invoice.

  • Make use of customer data

There are also huge opportunities for retailers to use business intelligence – whether as ‘big data’ to detect general customer trends or to analyse customer preferences and offer personalised promotions. Information about customers’ online purchasing habits can be integrated with data from store cards. Meanwhile new developments in data processing will also make it easier for retailers to detect customer preferences and needs as they enter a store.

Associate Professor Indulska believes Australian retailers have come a long way but still have room for improvement. Katie Curran agrees that there are signs that they are catching up. Katie says: “Traditional retailers in Australia have taken a walloping from international competitors as they were slow to embrace the internet. However they are learning and learning fast.”