In 2009, eCommerce in Australia is expected to generate around $18 billion in sales. That’s a lot! But it’s still only a fraction of what is sold in more traditional channels such as retail stores. Still, I know what you’re thinking…it would be good to get a bit of that action, yes? The decision whether to sell online, and to what scale, is a difficult one. While many elements and variables in the decision are unique to each retailer, there are a number of common factors in the decision. I have explored five of the compelling ones below.

1. Your shopper has, for all time, changed
Just like those in many similar countries, the Australian shopper has evolved quickly in three fundamental areas that every retail marketer should be aware of.

Firstly, the nature of the media they consume and style in which they consume it has changed dramatically. Online has quickly moved up to challenge TV as the most-consumed media in the Australian household. A report released by Nielsen earlier this month claims that online has already taken over TV, with an average of 13.7 hours a spent week online compared to 13.4 hours watching TV. While there is some question over the methodology, covered briefly here, the can be no denying the trend: all major media is down, except online. This rise in online amidst the decline and fragmentation of the major media means a more challenging landscape for marketers, and one that must include online media.

Secondly, online has quickly become the key media to influence what people buy and from where. The Australian Centre for Retail Studies and Google combined to research Australian shoppers in early 2008. The results showed that half of Australian consumers use online to research what to buy and from where, in other words to pre-shop, prior to going into store to buy. Covering consumer electronics, entertainment and computers, a quarter of the shoppers nominated online as their most crucial research tool, well ahead of other media.

Finally, there are many shoppers (and many more coming) who want to buy online. Why? The key reasons, according to Forrester Research, are firstly convenience, then selection and then price. I remember my very first marketing lecture in 1986 (yes, it was called Marketing 101) where the opening subject was “give the customer what they want”. If they want to buy online; then this is a good argument for you to start selling online. Otherwise…

2. You will lose sales and market share if you don’t sell online
Moving online opens you up to an entirely new set of competitors. Leading retailers like Deals Direct did not exist five years ago and today have more online customers than any of our traditional retail brands. Competition has also come from offshore, something the US eTailers are determined to increase, with 53% (Forsee Research) of them able to deliver to Australia. We know that Amazon is the number one online bookseller in Australia and Apple is the dominant music retailer. However there are also large players in areas such as cosmetics, apparel, jewellery and accessories. There is also a growing move to manufacturers selling direct online.

3. Your customer base will be more loyal if you sell online and will buy more in-store
To turn point two above into a positive, selling online will mean you will increase your sales. Online will reach further than your store can; will appeal to those who want to buy online; and will give you more visibility to those researching online. However, it is important to remember (though this is less understood) that selling through multiple channels will have a positive impact on your customers, their loyalty and their spend. Much of this influence online will have will have a positive effect on your in-store sales as well.

There is a significant amount of real data from research and retailers showing that a customer who interacts with a retailer through multiple channels will buy more frequently and will have a larger basket size. The major impact will be on your store sales. JC Penney published figures on the average spend of its customers, showing store sales to be twice as great for customers using two channels instead of one and up to four times higher for customers who interact across their three main channels (online, in store and catalogue). This is supported by research from Dieringer conducted online, which found that shoppers spend +60% more ($400 vs. $250) and buy two more items (five vs. three) at local stores than they purchased directly online.

4. Online sales is the fastest growing retail channel, and continues to grow in the current climate
According to eMarketer, 49% of Christmas 2008 gift spending among US Internet users occurred online, compared with 44% in stores. This is significant because it is the first time that the web has surpassed the store as the preferred channel for Internet users to purchase holiday gifts. Along the same lines, results from both the US and UK over the recent months show that while online sales are slowing in growth, they are still growing month-by-month. This is in stark contrast with store sales. According to Euromonitor Intl, since 2001 the combined annual growth rate of Internet retailing has outstripped every other retail category by close to three times. The channel is healthy moving forward.

5. The online channel can be more profitable
Because of the nature of selling online, the fixed costs remain relatively stable as revenue grows. What is less understood is the efficiency of marketing and the ability to eliminate any wastage in this area and the impact this can have on increasing your profitability. In a future column I will focus on this topic in some detail, however quite simply the equation is this: if you know your conversion rate (percentage of people who buy), your average basket size and your margin, you can engineer your marketing to achieve a certain return. This allows you to eliminate marketing wastage and retain a strong profit margin on your sales.

So there are some good reasons to sell online. In a future column I will explore some of the potential hurdles of starting e-commerce in Australia, and hope to suggest a few ways to overcome these.

If there is a topic you are interested in me exploring further or have any feedback, please email me.

In December 2008, Frost & Sullivan estimated that mobile subscriptions would pass 50% worldwide in 2013. That’s over 3.3 billion mobile phone subscriptions.  According to the report, at the end of  2008 there were close to 2.6 billion mobile subscriptions.  And thanks to the launch of the iPhone access to the Internet from a mobile handset is becoming more common.  As data plans drop in price and handset numbers continue to grow it is fair to say mobile phone usage, and the number of available mobile Internet sites, should jump significantly over the next 12 to 18 months.

Today you can already find a multitude of sites optimised for mobile handsets including Google, Facebook, eBay, BBC, The Sydney Morning Herald, Yellow Pages, Where Is, News, Drive, Cars Guide and Trading Post just to name a few.  And as of this Thursday (12th March) Lasoo.com.au will be added to this list.

The addition of Lasoo Mobile to the product suite adds yet another channel for Australian retailers to get their advertising message in front of a (location) targeted, and engaged audience.  For the savvy retailers who are interested in having their own branded mobile site, Thursday will also see the launch of the Mobile Offers product.

Lasoo Mobile in brief:

• Set-location feature so online relevant offers are displayed
• Free text search across all the 10,000 plus offers from lasoo.com.au
• Browse by category and sub category
• Search within a category
• Browse by retailer
• Search within a retailer
• Store locator to find the nearest retail store

Lasoo Mobile - Video Walk-through (Audio Not Required)

Mobile Offers in brief:

• Set-location feature so online relevant offers are displayed
• Free text search
• Browse by category and sub category
• Search within a category
• Store locator to find the nearest retail store

Mobile Offers - Video Walk-through (Audio Not Required)

Surviving and Thriving in Today’s Retail Climate was the theme for eTail 2009, the largest and longest-running online marketing and commerce conference for retailers. Held in Phoenix, Arizona and in its 10^th year, eTail 2009 delivered three and a half days of key learnings, case studies, research and technology. I was lucky to attend.

Amidst the difficulties facing retailers in the US, online marketing and online commerce have emerged as two channels that continue to perform strongly. Online commerce remains a strong growing sales channel for retailers, providing an exception to other channels. Online marketing offers retailers the opportunity to better understand their customers and in turn provides a cost effective tool to communicate with these customers.

So why do we care about retail technologies and trends from the US? Well, because they are in many ways a prediction of the future for Australian retailers. Certainly the American shopper is very similar to the Australian shopper in regard to their online behaviour. The difference is that Australian retailers are many years behind the US in their marketing and commerce strategies to meet this evolved consumer. And this is where the opportunity lies. Over the past ten years US retailers have made many mistakes in their digital marketing and commerce strategies and technologies have since matured. Learning what works and what does not, and adopting mature technologies and proven strategies with real ROIs is an enormous opportunity for Australian retailers.

eTail 2009 covered the following key themes:

· The power of cross-channel (marketing and commerce). The conference was more about cross-channel retailing than multi-channel retailing. The difference is that a customer should have a unified view of your brand and not a channel specific version of it. The benefits of a unified strategy leveraging the benefits of all channels were well illustrated by many success stories and real returns.

· Understanding your customer. Smart retailers have moved well beyond segmentation and profiling data, even beyond behavioural data, to gain a better understanding of their customers. Understanding intent and context are now a reality with a new third contributor to the customer uber data set.

· ROI. There was an intense focus on continuing to deliver real and attractive returns through the digital channel. There was a great deal of information offered around strategies, technology, programs and processes that had proven to further increase ROI across both marketing and sales.

· Marketing tools. The conference had good coverage of all possible digital tools and strategies. This included search, email, display, affiliates, mobile and more.

· Commerce strategies. There was a big focus on how to better cater for a customer who is on your site rather than focusing on attracting a new customer. Traffic to a site is easy; engagement and conversion were the key topics.

· User generated content (UGC) and social media. There is no denying the increasing power and influence the social consumer has online, not only over their own decision- making and purchasing, but also over others, thousands of others. This was explored from all angles in the context of how can retailers utilise this reality to make more sales.

· Technology. The conference had an associated exhibition, which showcased a large number of technology vendors and service organisations. Here we found the people, companies and technologies that can help provide all of the above.

The presentations, case studies and key learnings at the conference came from some of the world’s leading retailers and suppliers, including eBay, JCPenney, Home Depot, Coca Cola, Sears, Borders and Lego (did you know they are the world’s largest manufacturer of tyres…itty bitty ones though).

Overall the mood was upbeat, with an understanding that digital media as both a marketing and commerce channel presents all retailers with a real opportunity for positive returns, despite the economic climate.

The content and context of the conference was applicable for retailers from around the world. While I found some New Zealand retailers in attendance, I don’t believe there were any Australian retailers in attendance, which is a sign of the times, or a sign of the times to come.

Salmat will be running a series of Webinars over the next six-months focussing on many of the trends and case studies from eTail but bringing a very Australian flavour to it. Look out for information at www.salmatdigitalforce.com.au

Traditional retailers are reclaiming the ground lost to ‘e-tailers’ (online only retailers) over the past few years, with over 3.5 million unique visitors searching catalogues online for in-store offers over the December shopping period.

Bricks-and-mortar retailers reclaimed market share from e-tailers over the Christmas shopping period, with more than 3.5 million unique visitors searching the catalogues of retailers published on Salmat DigitalForce’s Lasoo.com.au and Dynamic Catalogue platforms during December.

The figure is an aggregated total of unique visitors throughout the month to Lasoo.com.au and the 20-plus Dynamic Catalogues hosted within the sites of individual retailers, including major brands such as Target, BIG W, Myer and Dick Smith.

Previous Christmas retail periods indicated a trend towards consumers engaging more with e-tailers’ at the expense of the bricks and mortar retail brands. This was largely attributable to the fact that time-poor consumers were easily able to find exactly what they were looking for on the internet from the online retailers, while traditional retailers struggled to make their brands and offers discoverable online.

Since the November 2007 launch of Lasoo.com.au, which allows consumers to search catalogues and offers from various retailers; and Dynamic Catalogue, a managed catalogue hosting solution that sits within the retailer’s own site; offline retailers have had an effective way of making their catalogue offers visible to consumers online. What’s more, the technology behind Lasoo.com.au and Dynamic Catalogue allows these offers to appear towards the top of search results from search engines such as Google. Until Lasoo and Dynamic Catalogue, these search results pages were previously dominated by e-tailers.

Pre-Shopping has become a growing trend for online shoppers seeking instant gratification, as witnessed by e-tailers with conversion rates around 1% to 4%. Retailers have capitalised on the behaviour in 2008, clocking up a 24% conversion rate from online–to-offline transactions.

Lasoo analysed Hitwise data by comparing a custom category of the Top 25 Retailers (traditional bricks and mortar retailers) against a custom category of top 25 E-tailers (pure online retailers) based on market share of Australian Internet visits. As a result the year-on-year comparison of the market share of traditional retailers v e-tailers during Q4 clearly demonstrates this trend, with the retailer Christmas traffic surpassing the benchmark previously set by e-tailers as they now seem to have reached a ceiling over the last 2 years.

E-Tailers vs Retailers  Q4 06

Etailer vs Retailer Q4 07

Etailer vs Retailer Q4 08

shop.lego.com www.1-day.com.au www.abebooks.com www.allposters.com.au www.altech.com.au www.amazon.com www.ap.dell.com www.apple.com.au/itunes www.avon.com.au www.bargaindeals.com.au www.bigpondmusic.com www.bodybuilding.com www.booktopia.com.au www.cafepress.com www.catchoftheday.com.au www.crazysales.com.au www.dailydeals.com.au www.deals2u.com.au www.dealsdirect.com.au www.dinosaurdeals.com.au www.dstore.com.au www.ezibuy.com.au www.ezydvd.com.au www.factoryfast.com.au www.fishpond.com.au www.graysonline.com.au www.hp.com www.isubscribe.com.au www.itvsn.com.au www.latestbuy.com.au www.lenovo.com www.liteneasy.com.au www.modyourcar.com.au www.moshtix.com.au www.mwave.com.au www.oo.com.au www.ozstock.com.au www.play-asia.com www.redbubble.com.au www.shoppersadvantage.com.au www.shoppingsquare.com.au www.simplymobile.com.au www.soldsmart.com.au www.strawberrynet.com www.streetsmartshopper.com.au www.techbuy.com.au www.ticketek.com.au www.ticketmaster.com.au www.topbuy.com.au www.wickedweasel.com.au www.winemakerschoice.com.au www.zazz.com.au www.zazzle.com.au www.zodee.com.au

Retailer Traffic included:

catalogues.bigw.com.au shop.telstra.com.au store.three.com.au store.vodafone.com.au www.abcshop.com.au www.aldi.com.au www.angusrobertson.com.au www.bcf.com.au www.bigw.com.au www.bigwentertainment.com.au www.binglee.com.au www.borders.com.au www.bunnings.com.au www.coles.com.au www.crazyjohns.com.au www.davidjones.com.au www.digitalcamerawarehouse.com.au www.digitalhome.com.au www.dse.com.au www.dymocks.com.au www.ebgames.com.au www.fantasticfurniture.com.au www.flightcentre.com.au www.freedom.com.au www.game.com.au www.harveynorman.com.au www.ikea.com www.jaycar.com.au www.jbhifi.com.au www.jbhifionline.com.au www.kmart.com.au www.loadit.com.au www.mitre10.com.au www.msy.com.au www.myer.com.au www.officeworks.com.au www.petersofkensington.com.au www.rebelsport.com.au www.retravision.com.au www.rivers.com.au www.sanity.com.au www.spotlight.com.au www.supercheapauto.com.au www.supre.au.com www.target.com.au www.target.dynamiccatalogue.com.au www.teds.com.au www.thegoodguys.com.au www.toysrus.com.au www.umart.com.au www.videoezy.com.au www.westfield.com.au www.witchery.com.au www.woolworths.com.au