Australian eCommerce – the sleeping beast

Jon Roberts had never set foot in Australia before he moved here. That was over six years ago now.

He moved across from the UK at the beginning of 2008 and has seen the digital market change a fair bit since that time. Joining as an early member of specialist agency Columbus Search (prior to their acquisition by Aegis).

Jon’s expertise meant that he was quickly promoted to General Manager before ascending the ranks to Managing Director – leading what had become the largest search agency in the country.

He’s now the Managing Director for digital agency Croud in Australia.

So what did Jon think of the eCommerce market over here?

Jon Roberts

“It’s fair to say that some of the major traditional retailers have been a little slower out of the blocks than in other parts of the world” he says, “It’s changing but not as quickly as one would like to see.” Lack of competition has played it’s part in this in many industries – a lot of which have only two major operators, “It creates a sort of duopoly, and retail is no different”.

Dominance can also create inertia it seems, and size has permeated a ‘you first’ mentality. Unlike other countries, the true cost of under-investment is not apparent on the surface. It’s a stalemate – a bit like a cold war.

Here’s the beautifully eloquent take on the value of eCommerce from Gerry Harvey, the co-founder and Executive Chairman of Harvey Norman, one of Australia’s largest retailers. It demonstrates the common viewpoint of the more established retailers quite neatly (swearing is model’s own):

“You devote all this time to your omni-channel and integrated bloody … and you go on with all this bulls**t and the result is that it is 1% of your sales. But if you don’t go on with the bulls**t you are out of fashion, you are not with-it.”

Well said Gerry.

“Instead of downplaying online trade as only 1% of sales, the real question should be why online only represents 1% of sales” counters Jon. The likes of Amazon and other major overseas retailers are now offering more choice and free delivery, and the customers here are lapping it up. It suggests that this 1% should be far higher – the retail dollars being spent, just not necessarily with Australian businesses.

I asked Jon for a bold prediction on what the future holds for some of Australia’s largest retailers if this attitude continues. “Some of these guys have been around for over a hundred years” Jon remarks “But unless they make a serious change of mindset and embrace and evolve in digital, we could see one or more of these companies going the way of the dinosaurs. My bet is that one of the great heritage brands of Australia could cease to exist in the next 5-10 years.”

There’s a chance for these businesses to take a foothold in the market and to fend off some of the threats from overseas businesses, but they need to act sooner rather than later and they need to commit to doing it fully.

“Stronger governance is needed for franchise businesses” he adds, businesses need to improve their tracking and use of data to attribute sales, and to work on conversion optimisation for localisation.

“It feels like a sleeping beast” says Jon – “There’s a massive opportunity in the space, but it feels like retailers – despite recent improvements, are continuing to underestimate the market and their consumers.” The market’s still there for the taking, but for how long will it remain so…?