There must have been lots of hand-wringing in the Lew household this weekend. It looks like Solomon’s sworn enemy – that dastardly internet – has ripped more of Australia’s hard-earned cash from his grasp.
Yesterday was Australia’s biggest online shopping day ever, with over 500,000 purchases ordered as shoppers took to overseas sites in the run up to Christmas.
As shoppers increasingly place value for money over shopping at Australian-owned sites, Lew is right to be worried.
For too long, Australians have been forced to pay exorbitant prices set by the dominant retailers. But online retail has finally exposed the vast price differences between domestic and international retailers and the appeal of shopping at Australian-owned businesses continues to wane.
According to Ernst & Young, 46 per cent of Australians don’t care whether the site they’re buying from is Australian or international. Instead, the cost of goods is now at the forefront of people’s minds, with 47 per cent of Australians considering value for money as the most important factor when deciding where to shop. Meanwhile, just 24 per cent believe Australian ownership is most important. "Australian made” just doesn’t have the same effect as it once did.
Consumers are still shopping on tight budgets, despite the latest rate cut, and can use the transparency that online brings to compare prices on the global and domestic markets, allowing them to decide for themselves if they want to pay the higher price for Australian goods or not.
Ernst & Young say that this Christmas Australians will do 35 per cent of their shopping online. But much of this will be with offshore retailers. Earlier this year, the firm published a report that found overseas retailers significantly dominate (in some cases up to 80 per cent) in the online sale of discretionary goods, including sporting and outdoor goods, cosmetics and clothing. As loyalty to Australian-owned businesses declines, it really is the last chance for both bricks-and-mortars and domestic online retailers to get their strategies right.
Shopping online has never been easier, and there has never been as much choice as there is now. Laptops, tablets and smartphones mean we are constantly "plugged in” and can shop any time, anywhere.
If Australian retailers are to survive, they need to adapt better and faster. Shoppers won’t put up with paying exorbitant prices when they can get the same goods from an international site much cheaper, no matter what Lew says. Why pay $30 for a book from an Australian retailer – online or in store – when the same book can be bought for $18 on Amazon.com?
Why wait longer to get clothes delivered from Myer – up to seven business days – instead of ordering from a shop like Next in the UK, where delivery is within five business days? Why bother nominating a delivery day on David Jones’ website when all it guarantees is that your item will be delivered "within two working days either side of the nominated date”? It’s completely absurd for retailers to think this is acceptable for shoppers.
Australian retailers need to get their act together. If they won't compete on price, they need to offer a service that overseas online retailers can’t. Too often, local retailers' online presence highlights their deficiencies when compared with overseas counterparts. For example, Myer’s wedding gift registry allows for guests to view the chosen items online, but one still has to go in store or call Myer to make a purchase. Better, more fluid strategies would avoid frustrating customers or make them feel ripped off.
The wide range of choice out there means that online shoppers can afford to be ruthless, and can easily choose to avoid certain sites if they have a bad experience.
Click Frenzy, marketed as the sale that would stop the nation, was one such half-baked attempt that won’t easily be forgotten.
Hailed as the Australian version of Cyber Monday in the US, the one-day super sale brought 153 retailers together to offer shoppers cheap deals on a range of goods from clothes to books and DVDs.
It was quickly branded a disaster after the website crashed within minutes. And when shoppers did eventually get on the site, there were numerous complaints on social media sites that the "deals” were still more expensive than on international sites like Amazon.
The one day super sale was a great idea in theory but ultimately a serious setback for the Australian online retail industry at a time when confidence in it is already low.
Click Frenzy wasn’t the only online blunder making headlines in recent weeks.
Retail giant Target was forced to apologise to shoppers last week after being bombarded with complaints due to significant delays in delivering goods bought online. The issue was with its "click collect” option on its website, which left customers waiting for weeks for emails to advise when the purchased items would be ready for collection.
Delays and errors such as these will only erode confidence in the sector. Australian retailers have had enough time to get their online strategies right. Consumer attitudes have changed for good and retailers can’t afford to continue falling behind their overseas counterparts.
The big retailers, Lew included, can complain all they want about the negative impact of international online retailers who don’t have to pay GST and how the fall in consumer sentiment is affecting their business, but it won’t get them far.
Online retail is only going to grow – and at a staggering rate too. Rather than waiting for a solution to the GST controversy, retailers need to stop complaining and fight harder to get customers back before it’s too late.
Online quickly or offline forever
It's up to retailers themselves to adapt and change so they can survive the overseas online onslaught – whether it be by battling on price, service or otherwise.
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