Australian retailers behind the online eight ball: report

Aussie retailers are behind the eight ball when it comes to engaging customers online and are at risk of losing out to overseas competitors, according to research from the University of Sydney.

Despite online retail sales having soared to $15.25 billion in Australian recently, the report shows almost 40% of Aussie retailers are failing to fully engage with customers online.

The Australian Digital Commerce report, conducted by the University of Sydney’s Business School in conjunction with consulting firm Capgemini Australia, says 38% of all Australian retailers are classified as ‘laggards’ who show poor implementation of digital commerce execution and engagement.

Only 26% of Australian retailers were found to be in the ‘high achiever’ category alongside international market leaders, displaying excellence in both execution and engagement.

The report defines digital execution as the provision of information and facilities to purchase online. Digital engagement is defined as the social interaction with customers across social media, forums and a retailer’s own digital spaces – and that’s where Aussies are falling behind.

“We found that among Australian retailers, the relational dimension (building of lasting relationships with customers for repeat purchases) is by far the least developed,” said the report’s authors.

“This was also where the largest gap with international market leaders occurred.”

Brian Walker, chief executive and founder of the Retail Doctor Group, told SmartCompany there is no doubt Australian retailers have been slower to take up digital commerce, but this is evolving.

“Every retailer in the county has a website now, but in many cases they are static and not used for trading,” says Walker. “But that is changing at a rapid rate.”

Walker says while digital commerce only accounts for 6-8% of the total retail transactions in Australia, some sectors are experiencing growth above 15%.

The report suggests the future of online retail success is closely related the implementation of ‘omni-channel integration’ systems, which provide online information about in-store offerings as well as logistical support for product pick-ups and returns.

Walker agrees the omni-channel space, currently offered by successful retailers such as Myer or Country Road, is key to the success of online retail. But he says such systems are out of reach for some smaller retailers.

“That’s a big capital investment and presents a challenge to smaller retailers,” says Walker.

“In that respect, if they saying we’re ‘laggards’, it’s not for want of understanding. It’s just the question of working out the process.”