SYDNEY, 20 July 2010 – Australia’s consumer eCommerce market is underdeveloped, lagging both the US and UK markets by approximately three years according to the latest eCommerce analysis issued by consulting company, Frost & Sullivan. Online retail consumer spending in Australia in 2010 is expected to account for approximately five per cent of total retail sales, however if spending on overseas sites is excluded, this drops to around three per cent. In contrast, online as a percentage of total retail spend (domestic only) is over five per cent in both the US and UK.

The report, Australian eCommerce Market 2010, analyses consumer online purchasing of tangible products. It includes the results of a survey of more than 1,000 active online consumers to provide purchasing information relating to five product categories: electronics, computers, books and CDs/DVDs, jewellery and fashion accessories, and clothing and footwear.

Total consumer eCommerce expenditure in the 2010 calendar year, excluding online services such online ticketing and events, travel, music downloads and financial services, is forecast to reach A$12 billion. This equates to per capita expenditure of approximately A$536 per year, which is slightly behind the US and UK markets. Expenditure is predicted to show moderate growth over the next four years, rising to A$17.7 billion by 2014 with a compound annual growth rate of 10.2 per cent. While the number of local e-tailers entering the Australian market has increased significantly in the last five years, there has been no corresponding increase in the volume of local transactions. The report notes that a significant proportion of new entrants fail to succeed over the long term.

A key reason for the lag in local activity is the lack of online presence by many of the large retail chains and department stores. Despite moves by stores including Big W, JB HiFi and Dick Smith, the small number of eCommerce participants and a lack of sufficient internal support from senior management continue to inhibit progress in this area. Frost & Sullivan suggests that the Australian market needs to see the online launch of several retail chains within the next 12 to 24 months to provide the catalyst for further expansion.

Other inhibitors to the development of a local eCommerce market include the strong physical store presence in capital cities and metropolitan areas, and Australian consumers’ limited acceptance of the typical online precursors – mail order and catalogue sales. Security concerns may also be affecting uptake. One in 40 of the survey respondents (2.5 per cent) indicated that their credit or debit card had been stolen in the last 12 months, suggesting that security remains a fundamental issue that needs to be addressed by the eCommerce industry.

The international retailer tactic of targeting Australian consumers by offering localized web services such as product prices and shipping in Australian dollars is paying off. It is estimated that 40 per cent of Australian online shopping expenditure is now conducted on overseas sites. eBay is the dominant online retail player, having successfully evolved from an auction site into a platform for fixed price overseas sellers. Companies such as Amazon.com which are building marketplaces and tools to power other retailers also pose a threat to some Australian vendors.

Consumer behaviour

Survey responses confirm that price is the key driver for shopping online (nominated by 39 per cent of respondents), followed by the convenience of shopping from home (29 per cent). The majority of consumers (58 per cent) showed no preference as to when they shopped, stating that they split their time evenly between weekends and weekdays.

Just over one-fifth of respondents (21 per cent) plan to spend more on online goods over the next 12 months compared to 16 per cent who indicate they intend to spend less. These results are in line with Frost & Sullivan’s forecast for moderate growth over the next four years. The strongest growth is expected in the categories of clothing and footwear, jewellery and fashion accessories, books and CDs/DVDs.

Credit and debit cards are the most popular form of payment method, used for online purchasing by 50 per cent of respondents within the last 12 months. PayPal is the second most preferred method, used by 42 per cent of shoppers.

Most shoppers (64 per cent) will visit a search engine before making a purchasing decision and more than half (57 per cent) seek out product comparison sites, indicating that consumers are increasingly reaching out to specific sites for product research rather than just conducting a general Internet search.

Phil Harpur, Senior Research Manager, Frost & Sullivan, comments, “The number of Australian shoppers using international retail sites confirms that there is a large untapped potential for Australian retailers to develop a local online customer base. However, we are unlikely to see major growth in this sector until more of the big name retailers get online.”

The e-commerce industry in Australia has seen rapid growth over the last year and is forecast to reach $AU33.8 billion by 2012 up from $AU24 billion last year.

In the last six months alone, large Australian retailers such as BigW have extended their presence online, providing a significant boost to the industry. As Australian businesses become increasingly engaged online, the conference will also address the future of mobile.  Globally, consumers are expected to spend $119 billion by 2015 through their mobile phones, accounting for about eight percent of all e-commerce activity, making it a valuable channel for retailers.

Mark Harvey, Event Director for Online Retailer, said: “There has been huge interest in the 2010 conference and a clear desire from Australian retailers to build, expand and improve their online offerings both online and increasing on mobile. We are dedicated to helping retailers and e-commerce professionals to grow and shape the future of e-retailing in Australia.”

PayPal Australia is in full support of the conference initiatives but warns that Australian retailers need to take better advantage of the opportunities online in order to fend off increasing competition from overseas.

Frerk-Malte Feller, Managing Director, PayPal, said: “Whilst the Australian eCommerce industry is growing, it is still significantly lagging behind the rest of the world with Australia’s domestic retail spend online half of what it is in countries such as the UK and USA.  As Australian retailers struggle to build effective online presence, overseas competitors are taking advantage of the gap in the Australian market and are currently taking around 40 per cent of Australia’s online retail spend.”

Several factors have been responsible for the slower uptake of e-tail amongst Australian consumers. While the cost of shipping, long delivery times and poor selection of items available in online stores have prevented some consumers from shopping online, concerns around the security of transactions remains the number one concern to consumers shopping online today.

Feller continued: “There is a huge opportunity for retailers to capitalise on the growing online marketplace in Australia. In the last six months alone the average consumer spent $1,223 on online shopping, an increase of $130 from the second half of 2009.”

According to Feller, the future of Australian e-commerce is incredibly exciting: “We have come a long way in the last few years.  PayPal now has over 30,000 active business accounts registered to send and receive money and I expect to see this number grow rapidly over the coming year as more Australian businesses build a presence online. We believe that the future of money is mobile as consumers seek to make payments from any connected device – be it a laptop or mobile phone today or a TV or a refrigerator tomorrow.”

They’ve also released a new clip featuring Mortimer:

Date: Weds,  30 June  2010
From: Matt Rutledge (CEO – Woot.com)
To: All Woot Employees
Subject: Woot and Amazon

I know I say this every time I find a picture of an adorable kitten, but please set aside 20 minutes to carefully read this entire email. Today is a big day in Woot history. This morning, I woke up to find Jeff Bezos the Mighty had seized our magic sword. Using the Arthurian model as a corporate structure was something our CFO had warned against from the very beginning, but now that’s water under the bridge. What is important is that our company is on the verge of becoming a part of the Amazon.com dynasty. And our plans for Grail.Woot are on indefinite hold.

Over the next few days, you will probably read headlines that say “Matt Rutledge revealed to be monstrous pseudo-human creation of Jeff Bezos.” You might even see this photo making the rounds. Rest assured that these rumors have nothing to do with our final decision. We think now is the right time to join with Amazon because, quite simply, every company that becomes a subsidiary gets two free downloads until the end of July, and we very much need that new thing with Trent Reznor’s wife on our iPods.

Other than that, we plan to continue to run Woot the way we have always run Woot – with a wall of ideas and a dartboard. From a practical point of view, it will be as if we are simply adding one person to the organizational hierarchy, except that one person will just happen to be a billion-dollar company that could buy and sell each and every one of you like you were office furniture. Nevertheless, don’t worry that our culture will suddenly take a leap forward and become cutting-edge. We’re still going to be the same old bottom-feeders our customers and readers have come to know and love, and each and every one of their pre-written insult macros will still be just as valid in a week, two weeks, or even next year. For Woot, our vision remains the same: somehow earning a living on snarky commentary and junk.

We are excited about doing this for all sorts of reasons. One, our business model is so vague that there’s no way Amazon can possibly change what it is we’re truly doing: preparing the way for the rise of the Lava Men in 2012. Also, our deal means that Jason Toon will finally be released from that Mexican jail owned by Zappos honcho Tony Hsieh. No, don’t lie, Tony, we’ve seen the paperwork. And we need a powerful ally in case Steve Jobs finally breaks down and comes after us for all our Apple jokes over the years. Don’t think of it as a buyout; think of it as NATO!

I will go through each of the above points in more detail later, but first, let me get to the top 5 burning questions that I’m guessing many of you will have.

TOP 5 BURNING QUESTIONS:

Q: F1RST!!!!
A: Okay, that’s not a question, but it is a good place to mention that our forums will still be policed by a team of moderators, as before. And also, Woot’s previous and always-in-effect privacy policy will still be just as always-in-effect, so don’t worry, there are no plans to suddenly give up or merge your forum data.

Q: Is Snapster leaving?
A: Are you kidding? He’s out the door about ten seconds after that check clea- that is to say, Snapster will continue as Woot.com CEO, just like before, and the rest of our staff’s not going anywhere either. Woot and all our various sites will continue to be an independently operated company full of horrible, useless products and an untalented jerkface writing staff, same as it ever was.

Q: Will the Woot culture change?
A: Amazon is interested in us because they recognize the value of our people, our brand, and our unique style of deep-tissue, toxin-releasing massage. And they don’t want to start changing things now. Amazon’s hoping our nutty Woot steez continues to grow and develop (and perhaps even rubs off on them a little). They’re not looking to have their folks come in and run Woot unless we ask them to, which incidentally you can do by turning off the bathroom lights and saying the word “Kindle” three times; a helpful Amazon employee will appear in the mirror. That said, Amazon clearly knows what they’re doing in a lot of areas, so we’re geeked about the opportunities to tap into that knowledge and those resources, especially on the technology side. This is about making the Woot brand, culture, and business even stronger than it is today, and we expect that any changes will be for the better or we wouldn’t bother with this endless paperwork.

Q: Where can I get one of those vuvuzelas?
A: Are you even paying attention?

Several months ago, when we were all sitting on Jeff Bezos’s bumper drinking orange Mad Dog and trying not to be noticed, we heard a voice in the distance yelling “You kids better not scratch my Mercedes or I’m calling the cops!” We ran. It was later that night when Amazon came by the house and said they liked our style and also wanted to get that money we owed them for messing up the chrome. We like to think that our relationship with Amazon will continue at this level for many, many, many years to come.

But we here at Woot are still a thoughtful company, so, at the end of the day, I watched the sunset, and its golden-hued glory made me think about two questions:

1) Is there really a universal deity?

2) Does such a thing preclude free will or are we humans in control of our own destiny?

After spending a lot of time falling asleep at the library while facing the philosophy books, I determined that the concept of destiny is a construct that allows man a gentle release from facing the terror of his existence, and that a Hyundai full of twenties would pretty much offer the same benefits. And so, I ultimately said YES!

This is definitely an emotional day for me. The feelings I’m experiencing are similar to what I felt in college on graduation day: excitement about getting a check from my folks combined with nausea from a hellacious bender the night before. I remember fondly that time when an RA turned on the lights and yelled “WHO OWNS THESE PANTS?” Except this time, the pants are a company, and the RA is you, and the sixty five hours of community service is a deal that will ensure the Woot.com experience can continue to grow for years and years and years, like a black mold behind the Gold Box. Join us, because together, we can rule the galaxy as father and son. Also, there will be six muffins waiting in the company break room, courtesy of the nice folks at Amazon.com. Welcome to the family!

Matt Rutledge
CEO, Woot

It is understood the online mall will be led by fashion, which the company sees as its strongest attraction, and split into categories including electronics and books.

MEDIA RELEASE – Although Australian bricks and mortar retailers have been slow to expand online, they have a distinct advantage over web-only retailers, according to the Executive Director of Salmat Digital, Paul Marshall.

In his presentation to the Online Retailer conference in Sydney today, Paul said that brand awareness, loyalty and an existing customer base are key assets when Bricks and Mortar retailers take their business online. Combine that with the power of the store network to give their customers a true multichannel shopping choice and they have a strong playing hand.

“Despite being slow to adopt eCommerce, the history and level of trust retailers have built with their customers will pay major dividends when they expand online, Paul said.

“Data from the US shows that consumers of multichannel retailers, or retailers with both a physical and online presence, are proven to be more loyal, buy more per visit, and have a higher lifetime value.

“According to the US Internet Retailer website, of the top 100 online retailers in the US, Bricks and Mortar retailers make up the largest segment (circa 44%) and are also the fastest growing segment over web-only retailers, mail-order retailers and manufacturers. Fast movers include Costco, Wal-Mart, Sears, and Best-Buy.”

“This shows that despite a slow entry, the bricks and mortar retailers are in a strong position to succeed in selling online. They can easily play catch up and overtake web-only retailers.”

In his presentation, Paul emphasised to retailers the importance of laying the right foundations, rather than rushing into an ill-thought out online strategy.

“Success in multichannel retailing is a marathon not a sprint. Making sure your house is in order is essential, develop the right strategy and invest where it matters.”

In 2009, eCommerce in Australia is expected to generate around $18 billion in sales.

The post by Zappos CEO Tony Hsieh is here. In a letter to employees he writes:

We plan to continue to run Zappos the way we have always run Zappos — continuing to do what we believe is best for our brand, our culture, and our business. From a practical point of view, it will be as if we are switching out our current shareholders and board of directors for a new one, even though the technical legal structure may be different.

Video from Jeff Bezos about Amazon and Zappos

From 10 September all store listings will have increased exposure as they will appear within the main eBay search results.  This will provide sellers with increased exposure on search results pages, however eBay is also introducing monthly store fees, ranging from $19.95 to $499 per month.

eBay Australia managing director Deborah Sharkey said that 50 per cent of eBay’s global sales were now fixed price and that, in the March quarter, such sales grew by 12 per cent globally while auction sales declined.

“Buyers are telling us that they want the same convenience and immediacy of payment on eBay as they get in their favourite department store,” she said.

For detailed information and explanations of all the changes, visit eBay’s “The Big News” page.

MIS

The company upgraded it’s 500 stores to a wide-area network to assist with real-time information transfer between stores.

“Not a week goes by without us receiving emails from people asking when they will be able to buy from us online, so we are very keen to get back into the space,” Ms Ryan, Colorado Group’s chief information officer said.

Read the full article at MIS Australia

Speaking at the Retail World Summit in Sydney, Marshall warned that retailers risk losing market share if they do not synchronise their strategies across different channels – otherwise known as cross-channel retailing.

“The internet has opened up a whole new channel for retailers to reach consumers, however, it’s critical that a retailer’s ecommerce business is not set up as a siloed operation.

“In the US, major retailers made the mistake of establishing their online business as a separate operation to their bricks and mortar stores, with different strategies, management and P&L statements. This gave rise to numerous customer service problems,” he said.

Read the full article at eTailToday.com.au

Kogan’s Australian head office will manage the Kentucky-based warehouse and products manufactured in China will be shipped directly to the US.

Ruslan Kogan founder and CEO said the company is in the final stages of opening the US branch after three years of growth in Australia.

He said the US market is 20 times bigger than the Australian market and shoppers purchase online there, which directly fits with Kogan’s direct online sales model.

“Our buying power will increase and products will become cheaper for everyone especially our Australian customers who will then benefit.”

Read the full article at CRN