How do Australian retailers tackle the global e-commerce craze? It’s all about taking a customer-focused approach
and making the most of
local advantages.

The stark nature of the pain being felt by the nation’s retailers was shown by the final figures for retail spending for the 2010-11 financial year: at a rise of just 2.6 per cent, it was the weakest annual growth in 50 years, according to CommSec.

But there was one shining bright spot: online shopping.

In the year to May 2011, CommSec said spending at pure online retailers increased by 126 per cent in volume and by 90 per cent in value.

Consumer watchdog CHOICE estimated in May 2011 that 43 per cent of the goods Australians bought online were ordered from overseas websites. CHOICE said that the top-selling items – clothing, electronic goods, books and sporting goods – often cost half as much and arrived faster, compared to similar goods shipped from
local stores.

“Australian retailers face the scenario where people use these overseas websites because of the cheapness of the products and their quality … a lot of people seem to be hooked,” says John Debrincat, managing director of e-commerce business solutions provider eCorner.

The best overseas retail websites make the whole process of buying from them as simple as possible: the whole way of doing business is focused on the customer.

“Cost is really important, but the whole shipping process – not just the freighting process – is really the key to the online retailers’ success,” says Debrincat. “By shipping, I don’t just mean the transport of the package; I mean the whole gamut of things: the packaging, the presentation, the speed.”

Against that, there are the readily apparent advantages of shopping locally: customers know the store, they can touch and test the product, they can have warranty and they’re protected under Australian consumer legislation.

But Australian retailers have dropped the ball, says Debrincat – they have allowed themselves to be overtaken, not only by competition from overseas websites, but also by local “pure-play” online retailers operating out of Australia. He says Australian consumers have realised the “fat” in local retail margins and they’re not happy.

Debrincat believes the strategy by which local retailers can fight back revolves around leveraging their advantages and rethinking their way of doing business – to connect their advantages to better customer service capability and actually get ahead of the international competition.

The return / refund process is a case in point, notes Debrincat. “Too often, you see signs up in stores, saying ‘no refunds’. They’re saying that refunds and returns cost us money to handle and process; we lose money, therefore we’ll stop it.”

In the new environment, this is absolutely the wrong approach, he adds. “If you make that return / refund process hassle-free, you’ll have a better customer on your hands. Not only will that customer come back and deal with you more often, they will tell all their friends.”

Holding back the tide

Debrincat says there are three key strategies that local retailers can use to improve their retail presence against overseas online shopping.

1. Online presence

Retailers need an online presence themselves, which they treat seriously as part of their business, not just as a “yes-we’re-doing-that” process. A website can be a key part of the customer experience and customer service. “There’s nothing wrong with spending time with someone in a store, helping them understand what is the best product to buy and saying to them, ‘why don’t you go to our website and buy it – and we’ll ship it to you free, and you’ll get it within 48 hours’,” says Debrincat. “It’s about thinking outside the square, about how you can join up these two different paradigms in retail and get an advantage.”

2. Follow-up

There is very little personal follow-up in Australian retail – but it’s critically important. When someone buys something from your store, whether it be bricks-and-mortar or online, have a member of your team make a call a few days later to ask, “Are you happy with your purchase? Is there anything wrong with it? Can we do anything else for you?” It all comes back to customer engagement and customer satisfaction. In the Facebook / Twitter world, it’s vital.

3. Lessen the hassles

Make it as simple as possible to buy from you – and return. Get rid of the onerous conditions. If the product doesn’t work or it’s not quite the right colour or it’s not what the customer expected, just say, “Send it back”. There’s no point in saving costs if you drive customers away. This simple, customer-friendly approach should apply equally to returns by post and returns in store.

The views expressed in this article are those of the author and the interviewees, and not of Australia Post.

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