Management Today

Australia's leading magazine for managers

Top 10 Online Retailers

10th Jul 2012 01:54

Click go the sales

After a cautious start, a growing band of online retailers are being rushed by impulse buyers and bargain hunters, says Victor Violante.

Australian retailers are quickly realising the need to embrace online. While still a few years behind some overseas markets such as the United States and the UK, and in particular online giants eBay and Amazon, the Australian retail sector has been making up a lot of ground in the past two to three years.

According to the National Australia Bank’s Online Retail Sales Index report for January 2010 to January 2012, last year online sales in Australia were worth $10.5 billion (though still just 4.9 per cent of traditional retail spending) and growing at a rate of 29 per cent a year compared with traditional retail sales growth of 2.5 per cent.

Bricks and mortar retail giants such as the Woolworths group, electronics specialist JB Hi-Fi and department stores have in the past two years sought to make up ground on their internet-based rivals with the launch of their own online stores.

Meanwhile, the explosion of online-only stores such as Deals Direct, BrandsExclusive and Booktopia are changing the retail landscape, becoming major players in their own right. So, what works and what doesn’t in online retail?

Retail websites leading their respective fields have some things in common: their websites are easy to navigate, making it simple to search, find and buy items; many include user ratings and reviews; and they are uncluttered with ads and intrusive pop- ups.

Several are also either tablet or mobile-friendly, or even offer a mobile- specific alternative, recognising that a growing number of people are surfing the net on other devices.

Nielsen’s Online Market Report published in February 2012 found the number of internet users in Australia who used tablets to access the net increased from 10 to 20 per cent from 2010 to 2011, while web browsing on mobile phones increased from 50 to 55 per cent.


10 Westfield

Westfield’s foray into online retail is a tentative one. But it is also a brave one because its success seemingly would come at the expense of its core business – historically successful shopping centres here in Australia and worldwide.

The concept of its online retail store works on the same basis as its shopping centres: Westfield online is a portal to carry the product of its many retail brands online, with retailers offering a selection of their products and paying Westfield a portion of their online sales on top of an administration fee.

Since launching the virtual mall in April 2010, Westfield has signed up more than 200 online tenants. According to Nielsen’s Online Ratings for January 2012, Westfield was 13th among mass merchandisers’ online page views for the month, with 805,000 unique visitors.

However, this was well behind some of its bricks and mortar rivals, including JB Hi-Fi, Harvey Norman, Big W and Kmart.

The website allows you to search by retailer or by product and the range is good. Once you register on the website, the site offers product suggestions based on your browsing and shopping history.


Peter’s of Kensington

Embracing the internet early, this homewares retailer branched out from its store in the Sydney suburb of Kensington in 2000 with its online store and relaunched it in 2010. A Sydney institution, Peter’s of Kensington has a loyal customer base and its discounted brand-name kitchen products (glassware, crockery and collectables) have also found a market online, delivering across Australia. In recent years, it has branched out to offer beauty products and travel products such as luggage bags, but kitchenware remains its primary focus.

The website is pink-themed, like the signature building the retailer occupies, and it’s no surprise the bridal registry section features prominently, given it is no doubt a major part of the business’s operation.

The site offers a PayPal payment option (the most popular online transactions facilitator and favoured by eBay and Amazon) and postage is surprisingly cheap – the quote for delivery of a heavy, cast-iron frying pan from Sydney to Canberra was only $9.50.


JB Hi-Fi

The electronics retail sector in Australia is one that faces strong competition from global online operations such as eBay and Amazon. JB Hi-Fi is one of the most resilient in its field across its more than 150 stores nationwide, with the company expecting sales in 2011-12 of about $3.1 billion, a five per cent increase on 2010-11.

While online sales represent only 1.4 per cent of JB Hi-Fi’s total sales in Australia and New Zealand, in the first half of 2011-12 online sales grew almost 90 per cent and website visits averaged 957,000 a week.

At first glance, JB Hi-Fi’s bright yellow branding appears overwhelming, but once your eyes adjust to the brightness, the site is easy to navigate, search and conduct transactions.

The product range is extensive, and you have the option of having an item delivered or pick-up in-store. Delivery is also convenient, with free shipping for even hefty items (such as a 55-inch screen television used to road-test the site). Although the site doesn’t offer anything in the way of customer reviews or comments, it does suggest links to “also viewed” items and “related offers”. There is also a mobile-friendly version of the site.


7 Big W

In a tightening market for department stores, Big W was quicker out of the blocks than its rivals with its online store launching in May 2010, almost a year before Target. Part of the Woolworths empire, Big W’s online store leads Target, Kmart, Myer and David Jones in online traffic.

According to Nielsen, Big W’s site had more than 1.7 million unique visitors in December 2011, well clear of Myer and Target who both recorded just over one million (though both experienced traffic growth of almost 50 per cent in just two months, whereas Big W’s grew by only 26 per cent on its 1.3 million visitors in October 2011).

All department stores in Australia are scrambling to embrace online, with mixed results. Compared with other sectors, the department stores’ online offerings have their shortcomings – limited product range, expensive postage fees and the occasional technical problems (Big W attracted criticism at Christmas when a backlog in online orders meant a number of orders submitted in early December failed to be delivered before Christmas).

Big W’s website is effective enough and simple to navigate, though the limited range available for online purchase is frustrating. It does, however, invite and display customer reviews of products and allows customers to place an online lay-by.

Big W’s online dominance could face stiff competition from Target, which recently launched a new-look site and increased its online products from 6000 to 31,000.


6 The Good Guys

Another major retailer making inroads into online sales, The Good Guys recorded more than 800,000 unique online visitors in January 2012, according to Nielsen. Last year, the online arm of the business was boosted with franchisees delivering stock to consumers, rather than having to pick up in-store (the Good Guys is a collection of independent stores).

The first thing the site asks you to do is find your local store. From there you are given prices, products and offers specific to that store. One very clever feature is that each item has a “compare” box you can check.

Say you check the compare box for three fridges, you then ask the site to compare your selected items and you are presented with a detailed table comparing all the specs across the three items such as dimensions, energy rating and warranty. This is a simple, but effective site that replicates the in-store experience well.


5 BrandsExclusive

The brainchild of former eBay executive Daniel Jarosch and former PricewaterhouseCoopers employee Rolf Weber is Australia’s biggest private shopping channel. The concept is simple: sign up free online, then get exclusive daily offers that last only a couple of days on heavily discounted (as much as 75 per cent) brand-name clothing and other goods.

Having attracted more than 1.6 million subscribers since its launch in 2009, the sense of exclusivity and cheap prices has proven a hit with shoppers.

Known as “flash sales”, BrandsExclusive’s model relies on impulse buying to the extreme. Every day BrandsExclusive launches 10 new sales announced by a personal daily email, and only members can view the daily offers.

The online retailer recently launched a live feed function, a dedicated page that shows recent purchases, trending items and tweets from BrandsExclusive members, and enables members to buy directly from the feed or share them on social networks such as Facebook or Twitter.


4 Woolworths

The battle for dominance in the supermarket wars between Woolworths and Coles is playing out just as fiercely online. According to Nielsen, in January 2012 Woolworths more than doubled Coles’ unique website visitors, with more than 2.6 million (Coles managed just over one million).

In 2010-11, Woolworths’ food and liquor sales online tallied up to $360 million, still only one per cent of its total sales. Woolworths’ website allows you to select your nearest store, choose your items (providing you with a tally of your spend), and then a “personal shopper” handpicks your grocery list in-store.

Depending on your location, you can either have your purchase home-delivered, or you can pick it up in-store. Coles offers much the same service and it’s slowly taking off, although online grocery sales are still relatively unpopular.

But it’s Woolworths’ mobile app that impresses. As well as allowing you to make a shopping list and have items home-delivered, the iPhone and Android app allows you to use your phone to scan barcodes in your pantry to compile a shopping list and offers recipes. Coles offers a similar app called Shopmate for iPhone and Android phones.


3 Booktopia

Australia’s answer to Amazon, Booktopia is Australia’s biggest online book retailer, shipping more than one million books a year and aiming for a $20 million turnover in 2011-12, up from $14.2 million in 2010-11.

Launched in 2004, in recent years Booktopia has expanded to sell DVDs and ebooks, having partnered with Google in November last year to offer Google eBooks for the growing market of e-readers.

In October, Booktopia was ranked 72nd in the BRW Fast 100 for 2011 (the list ranks the 100 fastest growing companies in Australia over the past three years), the third consecutive year it has made the list, and one of only nine retailers on it.

Booktopia’s books are heavily discounted, and it ships as many books or DVDs as you order for a flat fee of $6.50 anywhere in Australia.

The website is refreshingly plain, and very easy to search (the sort of thing that is especially handy when looking for an obscure author or title). Extras such as blogs, interviews with authors and advice for writers make Booktopia a leader in its field.


2 CatchOfTheDay

Launched in 2006, CatchOfTheDay has become Australia’s biggest online retailer and is growing quickly. Perhaps the site’s description sums it up best: “At CatchOfTheDay we feature one amazing deal every day, at midday (eastern time), at an insanely low price.

Our feature deal goes live at precisely midday and is available for 24 hours and no more, unless sold out prior. It could be anything from a top brand LCD television to an event with amazing prices on chocolates. Anything is possible!”

With more than 1.5 million subscribers, about 1.4 million unique online visitors a month and selling an average of one item every three seconds, CatchOfTheDay is on track to record a turnover of $250 million for 2011-12. The online retailer also owns group-buying site Scoopon, groceries site and in April this year acquired a majority stake in online wine retailer Vinomofo.

In June last year, a group of high- profile investors, including James Packer’s Consolidated Press Holdings, investment firm Tiger Global and Andrew Basset of job search site Seek invested $80 million in CatchOfTheDay.


1 DealsDirect

Bearing a striking resemblance to eBay in appearance, layout and range (minus the bidding), it’s not surprising DealsDirect began within eBay’s framework of online partner shops in 2004.

Since then, it has grown to be Australia’s biggest online-only department store, with an annual turnover of more than $100 million (it came in at ninth on Nielsen’s mass merchandiser report for January 2012, with more than one million unique visitors).

Last year James Packer’s investment arm Ellerston Capital bought into DealsDirect in a deal the Australian Financial Review estimated to be worth $10 million, and since then DealsDirect has been acquiring other online retailers.

Earlier this year, it snapped up au, and previous acquisitions of specialist online retailers include ToyBarn, ExtraDVD and Shoppers Advantage.

Today, the Sydney-based DealsDirect sells 23 categories of retail goods including electronics, kitchenware, watches, toys and games, and it is on the look-out for more opportunities to expand its range.

Inviting impulse purchases with its “clearance bin” category (maybe I do need an electronic bank note counter for $99.95) and other prominent specials, the eBay influence is evident. And let’s be honest, you could find worse role models than eBay.


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