Three reasons e-commerce is essential for your retail strategy

04 May 2017

Joss Honour / Business Development Manager / Australia & Pacific

In 2017, an e-commerce strategy is no longer an option, it’s a fundamental part of your growing business.   

Recent research, commentary and opinion bear this out, including Inside Retail’s Australian Retail Outlook (ARO) 20171, Nielsen’s research2 on Australian consumers’ views on Amazon; and other recent forecasts of international retailers eying the Australian market3. As Steve Lowy, co-CEO Westfield Corporation, put it recently, “Traditional retailers are under pressure, internet sales are growing and continue to grow and the Amazon effect, particularly in the US, is startling.”

Here are three reasons I believe enhanced e-commerce is essential for retailers: 

1. You have no choice 

The Nielsen research delivers some compelling numbers. Australians are “eagerly” awaiting Amazon’s arrival with more than 50% of the 1,500 people surveyed saying they are likely to purchase through it. The respondents (45%) were also very open to joining Amazon Prime to get deals, discounts and better delivery, which supports Amazon’s strategy of entering the Australian market with Prime first. 

Around 60% of consumers surveyed said they are likely to buy clothing and shoes online from Amazon. I find this especially interesting about shoes because I often hear New Zealand shoe companies citing the fitting needs of their customers as a reason for not having an online store. 

2. Online is one of the top three drivers of sales growth for retailers 

Still not convinced online leads to sales growth? David White, National Leader, Deloitte’s Retail, Wholesale & Distribution group reported in ARO 2017 that online offerings are among the top three drivers of sales growth for retailers, following new stores and new products - both far more capital intensive strategies. 

A well thought out digital marketing strategy designed to drive e-commerce traffic to your product may be the first or next step in growing sales internationally in a cost-effective way.  

3. It reduces risk 

Even if you have the capital (especially working capital, when you consider the inventory required to support disparate physical outlets) and the human resource in place for your international expansion, how do you decide where to sell your product, who will buy it and whether to open your own shopfront or seek other channels?  

E-commerce can be a lower-risk way of reaching into export markets. I regularly see examples of purely online businesses adding physical outlets to their strategy as their businesses mature. One of the more recent examples is a Melbourne based furniture retailer (Brosa) which has been online only since launch in 2014 but opened a by-appointment showroom in Collingwood in late 20165

Another sometimes overlooked benefit of e-commerce is the rich, instant intelligence gathered about your sales and markets. Data collected through online transactions will help you know where your customers live, what they look at online and what they buy. Valuable insights like these will maximise your chances of success in choosing a location, minimising your stock and maximising your sales if and when you set up a physical outlet. 

Given the Australian market’s proximity and similar character, many New Zealand companies see it as their first export foray - which makes sense. For retailers, it also makes sense to accept the high levels of competition as well as the risk of cash burn and use e-commerce functionality to gather market intelligence before jumping in. 

New Zealand Trade and Enterprise’s Digital Program is designed to review your current position and help you develop next steps that will support your growth and give you greater confidence to grow bigger, better and faster. 

Joss Honour is a Business Development Manager in the NZTE AusPac team and joined in 2015 after more than 25 years in business creating growth strategies for small, medium and large businesses. She is a member of NORA (National Online Retail Association) Australia. 

1 “Disruption the New Norm”, David White, Inside Retail Australian Retail Outlook 2017, Azurium. 
2 “Australian consumers eagerly anticipate Amazon’s arrival”, Internet Retailing, 21 February 2017. 
3 “All eyes on Australia”, Jared Dickson, Inside Retail Weekly, Issue 2126, 1 February 2017. 
4 “Westfield Corporation to navigate retail storm”, Turi Condon, The Australian, 24 February 2017. 
5 “E-commerce stat up ramps up showroom strategy” Healther McIlvaine, Inside Retail Weekly, Issue 2129, 22 February 2017