With the rise of online shopping, pressure on traditional retailers to compete with cheaper prices and greater variety available online provides both risk and opportunity. This continues to be heightened by the strong Australian dollar, which increases consumers’ purchasing power on overseas sites.
An estimated $6 billion of sales from Australia in 2011 were purchases on overseas websites, which equates to around 40 percent of overall online sales, according to Frost & Sullivan. It is becoming increasingly obvious that if many traditional retailers don’t start consolidating their physical store presence and migrating some sales to the online channel, they are both ignoring a very large opportunity and adding additional pressure to stores.
Surprisingly, Frost & Sullivan’s research also found that only around 50 percent of Australian retailers in 2011 offered online sales capabilities, with the proportion of sales via the Internet still fairly low. Many other retailers use their websites only for marketing and customer support. This just goes to show that many retailers are still missing out on market opportunities from the booming online retail sector in Australia.
The slow adoption of online retailing by large department stores and retail chains in Australia is a key reason for the lag in local ecommerce activity overall. This is showing signs of changing, however, as many are being forced to walk a new path. Leading Australian retailer David Jones, for example, is one of the most high profile recent cases, launching a new and improved web storefront last fall after a succession of poor earnings reports.
Despite a shift in focus, however, it became clear during the failed “Click Frenzy” online sales event in Australia late last year just how unprepared retailers are to cope with online channels, despite the hunger for it from Australian consumers. The heavily marketed Click Frenzy sale involving over 200 Australian retailers failed to perform at launch time because the site couldn’t handle two million hopeful shoppers looking for a bargain. Also unprepared were a number of major participating retailers, including David Jones and Myer, whose websites crashed under the high traffic volumes as well.
The lesson learned is that the sheer number of consumers wanting to find a bargain online should be a wake-up call to Australian retailers to take notice and get the right multi-channel strategy in place now—otherwise they will continue to lose out to overseas online sites. The major challenge for retailers is the increasing range of digital channels that customers use to access the Internet. This fragmentation creates a number of hurdles, particularly when it comes to implementing a common customer experience across all channels.
Ecommerce is not a standalone system—customers want stock availability, discount tiers, payment options and specifications, and retailers need to offer these in real time from the back end, along with invoicing, margins, analytics, etc.
Retailers need a single system with a built-in webstore that adapts to any consumer- facing device in real time, links online systems to central business systems, from ERP and CRM to POS, and addresses Internet latency and reliability issues across all channels. For many retailers though, the complexity and cost of running a single transactional system optimised across all digital channels and integrated into internal business systems is overwhelming.
This is where cloud computing really opens doors, by unifying separate retail channels to provide a single view of the customer, sales and revenue. Cloud computing changes the game by offering the opportunity for a lower cost and much lower risk rollout of the ecommerce software needed to support multi-channel retailing, which is particularly attractive for smaller businesses with limited resources.
The cloud can give you real-time visibility into your entire retail operation, accessibility from anywhere at any time, as well as a single view of a customer across all channels. You can also ensure that your order, inventory and financial information are always up to date. Its infinitely scalable nature can give you the confidence that your site will stay open no matter how many customers cross its digital threshold.
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