Big brands taking over online retail, new figures show

The retail industry is slowly being taken over by larger and more traditional retailers as they start setting up online stores to beat out the smaller competition, new traffic data from Nielsen has revealed.

The figures highlight the booming online retail industry in Australia, which has grown significantly over the past year to account for about 7% of overall retail sales.

Mark Higginson, analytics director for Nielsen Online, says the growth of large brands has been one of the largest trends over the past 12 months.

“These traditional retailers are the ones who have been driving this growth,” he says.

The Nielsen data for January 2011 shows eBay on top with 5.5 million unique browsers, followed by Amazon at 2.1 million, Woolworths at 1.4 million and JB Hi-Fi at 916,000.

DealsDirect comes in fourth with 802,000, followed by Big W with 796,000, VistaPrint with 730,000, Dick Smith with 700,000 and Officeworks at 575,000 unique browsers.

Kmart Australia came in 10th with 562,000 unique browsers in January.

The standout is clearly auction house eBay, which beats the second-most popular site, Amazon, by a few million unique browsers. Forrester Research analyst Steven Noble says it has become a staple not only for consumers but for businesses as well.

“eBay is a significant component for the economy. There are many businesses that do use eBay as a shopfront, some of which have their own off-site shopfronts as well, and DealsDirect is a good example.”

“Any product that you want to find on DealsDirect you can find on their shop on eBay, as far as I am aware, and they sustain eBay as a sales channel, but not their sole domain for their sales.”

eBay recently released figures showing that its top 200 merchants recorded revenue growth of 38% during 2010, with its most successful merchant topping $12 million for the year.

But Higginson says while eBay is certainly dominating the online retail space, he points out their grip is actually declining as these larger brands start coming online.

“eBay has long been a category winner. It empowers individual sellers and businesses to set up their own stores in ways that are attractive to customers – especially if you are a small business owner.”

“But one of the interesting things we’re seeing is that their popularity is actually tracking down – their traffic is down from last year. Not by much, but it is a slow downward trend.”

Higginson says the major growth is being seen in these larger brands – Woolworths is up 48%, JB Hi-Fi is up 42% and Kmart is up 46%.

“The whole global financial crisis and Harvey Norman debate may have had a big effect on this. We’ve seen massive growth in online, and the mainstream retailers have gotten to a point where there is so much going on they can’t ignore it.”

“Even things like the group buying category would prompt them to come online. It’s suddenly a huge business model and shows how this all really works.”

But Forrester Research analyst Steven Noble says while these sites may be getting the most traffic, they aren’t the biggest sellers.

“It’s possible that a trend like this is occurring, with regard to higher sales, but I’m not seeing evidence of that in our data. The Nielsen data refers to web traffic, which may certainly lead to an increase in online sales, but the data doesn’t specify.”

“It doesn’t necessarily show which retailers are becoming more popular, if you define popularity as by making a sale. “

Nielsen also stresses this data doesn’t actually correlate with sales.

Noble says while the introduction of larger companies certainly highlights their absence over the past decade, he also points out that it’s the smaller companies that are getting most of the money.

“Certainly a number of larger and more traditional retailers have come online recently, or will do so in the near future, and they are taking a share of online sales. They will continue to do that, but at the same time, overall online sales are growing rapidly and the pie is getting larger.”

1. eBay – 5.5 million
2. Amazon – 2.1 million
3. Woolworths – 1.4 million
4. JB Hi-Fi – 916,000
5. DealsDirect – 802,000
6. Big W – 796,000
7. VistaPrint – 730,000
8. Dick Smith – 700,000
9. Officeworks – 575,000
10. Kmart – 562,000