Why not sell online?

Written by dgm’s CEO Asia Pacific, Fionn Hyndman published in Adnews 25th July 2008.

For some reason there are hardly any well-known high street retailers from Australia online and the ones that are, well quite frankly, aren’t doing a great job of it.
I buy my books from Amazon.com. It’s cheaper, delivers to me faster than a couple of well-known Australian bookseller sites and has amazing customer service, recommendations and follow-up.
I just don’t understand where the issue is. There is strong research evidence that there is an appetite by Australian consumers to shop online.
Heartbeat Research in 2007 reported that one in three Australian are members of online auction site and two-thirds of Australians that are online have brought something online through the internet in the previous 12 months, probably from overseas online vendors!
With some 50,000 Australians professional eBay sellers, why aren’t department stores like Myer and David Jones online?
In reality, e-commerce in Australia is eBay’s domain and while it is a person-to-person sales channel, it is the eBay brand that adds comfort to shoppers online.
Consumers feel comfortable with brands they recognise, and they want to shop with those well-known brands online. It gives them the comfort factor from a security point of view, but also lets them feel they know what they are buying.
Australian mainstream brands just haven’t woken up to the opportunity. They don’t perceive that their customers want to buy from them online, or maybe they are concerned that it will affect footfall in their stores.
Yet Heartbeat’s research tells us that out of every $11 spent by Australian consumers, $1 is now spent online – that’s a lot of dollars, and by 2010 the research predicts 80% of Australians will be online shoppers.
Yet in my experience, popular items with low margins, like consumer electronics are a nightmare, if not near impossible, to purchase online in Australia. Have you seen the Harvey Norman site? It defies belief, when the model could add lucrative revenues to the franchisees of Australia’s consumer electronics retail giant, let alone satisfy their customers.
Dick Smith is there and has a great opportunity over its competitors. However, it seems to have only put its toes in the water and is not making the most of providing a really engaging experience online.
Opening up to ratings, reviews and customer recommendations would add immense value as opposed to the straight-forward catalogue shopping cart experience that it currently is.
Peter Alexander is doing well by all reports and Sportsgirl has launched with links to social network Facebook. Then there are good comparison sites such as au.shopping.com and myshopping.com.au
Maybe these brands will drive a large dominant retailer to launch a real online service. I predict when that happens, it will be the single key market driver for Australian e-commerce, and that other retailers will follow.
Internationally, the multi-channel retail model has proven to add valuable profits to retailers in terms of cost effective sales, enhanced customer service models and increased reach. One of the UK’s largest consumer electronics giants, Dixons Stores Group, has actually taken the step of closing part of a chain of high street shops as the online model is proving so successful for them.
So why are Australian retailers not out there selling online - through arguably the most cost-effective channel available, one that has made retailing one of the biggest internet success stories in nearly every country except our own?