Australia set for online shopping boom

By Kritika Seksaria

After a slow start, online retail in Australia has experienced a rapid annual growth of 8.9% from 2006-2011, indicating a future boom in the years to come.

The spike in online shopping is credited largely to faster Internet speed and the reliability of technology. According to retail expert Barry Urquhart, Australians have always been quick to adapt technology, however, they are reluctant when it comes to a system they don’t trust.

Giving out credit card numbers online has often been considered risky and the single biggest factor preventing online shopping in the past. As Australians have realised that there is no record of lost identity or proliferation on these websites, they have warmed up to the idea of spending online.

E-commerce is becoming a part of Australian lifestyle. The competition has led retailers from various industries to increasingly enter the online market in order to strengthen their profit margins. As a result, the role of the Internet in retail landscape is reinforced.

According to IBIS World 2011 report, the industry is likely to experience a further influx of new players in the next five years, with the rest of Australia’s primary retailers jumping onboard. Presumably, that will lead to an increased product range, service selection and cutthroat competition. Retailers will therefore have to reduce product margins and other associated costs, such as delivery fees.

Moreover, smartphones with Internet connection and innovative apps will facilitate the provision and use of a wide range of online goods and services.

Myer, the giant department store, chief Bernie Brookes states that online sales on the Myer website will explode in times to come. Myer is spending around $9 million to upgrade and develop their website by 2012 with the aim of increasing online sales from $5 million to $30-40 million.

In spite of the enthusiasm and exhilaration by the retailers, it is worth wondering whether or not a virtual world of tiny icons and clicks can replace the experience of touching and browsing, especially in the fashion industry.

Barry Urquhart says that as far as fashion is concerned, consumers definitely prefer to touch, feel and try on before making a purchase. Therefore, in his opinion it is important for fashion retailers to provide a large variety of products and offer excellent online services to prevent losses to brick and mortar stores.

A Herald Sun report states that Brookes said the department store operations and the online sales operations would complement one another. Customers will be able to order online products that are not available at the department store. Also, a dress ordered online could be collected, returned or tried on in-store.

The current high rate of the Australian dollar has resulted in consumers spending on international online brands. However, IBIS World 2011 mentions that a fall in the value of the currency during the next five years will give Australians an edge over foreign competitors whilst creating better opportunities for export.

The current key player boasting of enormous success on the online retail landscape is Woolworths with a market share of 7.5%. Other local companies such as JB-Hifi (electronics) are also carving a niche for themselves.

Group buying is colossal in Australia, offering competitive prices on vouchers on meals, hotels, activities and products. Businesses can generally offer cheaper prices because they are bought in bulk from the group-buying site. Some of the popular websites are www.catchoftheday.com.au, www.dealsdirect.com.au and www.Dstore.com.au.

Kritika Seksaria is a Regional Representative for Asian Correspondent based in Melbourne, Australia.

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