News Analysis: Australian e-commerce sector set to ride global wave

E-commerce is the buzzword of the global marketplace and Australian retailers, particularly the big players, look set to tap the growing sector.

"We'd have to concede that the real beneficiaries of the online renaissance have been the established retailers," Paul Greenberg, executive chairman of Australia's National Online Retailers Association, told Xinhua in an email interview earlier this month.

Smaller players along the lines of portals will "continue to prosper," Greenberg said, but the "real winners, the big winners have been the big guys."

Greenberg was helping to take stock of the sector amid a crucial time in its development - National Australia Bank's online retail sales index report released earlier this month showed that online spending rose 14.2 percent over the last year.

In the 12 months to September, Australians spent about 20.8 billion Australian dollars (16 billion U.S. dollars) on online retail, or about 7 percent of the "traditional bricks and mortar" retail sector, according to the report.

The "takeaway food" segment - representing "a rapidly evolving and innovative way of ordering food, supported by recent advancements in methods such as mobile phone applications" - recorded the fastest annual online sales growth in September, NAB reported.

Domestic retailers "continued to show strength against international counterparts, accounting for about 80 percent of spending in September," the report quoted the bank's chief economist Alan Oster as saying.

Many in the industry say there is much room to grow in the Australian market. Greg Goodman, chief executive of logistics giant Goodman Group, was quoted by the Australian Financial Review as saying that the country is "behind the curve" in global e-commerce. Goodman said "plenty of commentators say that Australia is behind the rest of the world in e-commerce and I think that is absolutely right."

His critique came ahead one of the most anticipated events of e-commerce - the Singles' Day online shopping spree among Chinese consumers on Nov. 11.

The day draws on popular celebrations among young Chinese marking singlehood, thus the number "1" in the date to symbolize someone who is alone or a "bare branch."

Promotions by e-commerce giant Alibaba via its shopping portals like Taobao and Tmall that center on the date have raked in increasing sales over the past three years, topping 14 billion U.S. dollars last year.

The feat by the U.S.-listed Chinese group has pointed to the potential of rich e-commerce pickings in other parts of the world and set a high standard in the field.

"In pure, unbridled volume, China is leading the pack. In terms of potential, no doubt it will continue to lead the pack," said Greenberg, adding that India is also "one to watch" with the latest investments by U.S. industry leader Amazon in the South Asian market.

One way for Australian businesses to stay in the increasingly competitive game would be to "move their products up the value chain," Greenberg said.

Greenberg cited global fashion giant Louis Vuitton's stake in Australian bootwear and clothing retailer RM Williams as an example of how that could be done. He also pointed to pearls company Paspaley, dietary supplement maker Blackmores and food and beverage group Bellamy's as companies that could similarly leverage their brands.

Still, Greenberg said there were challenges facing the Australian e-commerce sector that had to be taken into consideration, including that of logistics.

"We are a massive country, a huge landmass... so we do have some impediments, structural impediments around specifically the supply chain," he said.

"One of my concerns around shipping is that customers seem to want to pay less, most have got used to free shipping which is always a big driver of sales, but it seems to be that the big shipping companies want a few dollars more to make sure their balance sheets tie up," he said.

"I'm a bit worried about that slight disconnect, between customer expectations around delivery costs and efficiency, and what the industry really needs to change," he added.

"I think it's just playing out at the moment and I'm sure it will settle down."

In fact, e-commerce in Australia might be headed in the direction where "ultimately customers are looking for a convergence in retail," Greenberg said.

"There's a strong consensus that the 'e' will be out of e-commerce as digital is kind of disappearing, it's just becoming the economy.

"Good retailers will offer anything to customers anywhere, anytime, as opposed to a single channel model that be online or bricks and mortar ... the new model is a multi-touch retail, which appeals to customers at difference stages in their shopping cycle in different ways." Endit