Issue 50 Issue Home News DM showcase 50 tips from the top Testing the waters Charting new territory Scaling the heights Fitting the bill Streamlining the process Great expectations The great cyberspace race A culture of giving Business appeal	The great cyberspace race Published Date: August 2010 From major department stores to the local butcher, online retail is a major growth area. The advantages are infinite, the risks minimal - what is any retailer waiting for? The multichannel boom has well and truly arrived, with Australian consumers increasingly turning to the internet for browsing and buying. While multichannel retailing - in the online sense - is still in its infancy in Australia, huge opportunities exist for businesses to capitalise on the low barriers to entry to e-commerce. The sector is rapidly burgeoning, enough to place online retail in economic forecaster IBISWorld's top 10 predicted growth categories for 2010. According to the latest IBISWorld Industry Report, online retail in Australia is expected to grow 4.7 per cent in 2010, reaching $20 billion in revenue and placing it eighth on the list of predicted growth industries - the highest-ranked sector of retail. However, according to some experts, the local industry has had a sluggish start compared with that in many other developed countries and there is a serious threat of losing market share to overseas competitors. The time to act is now. "More than 45 per cent of all online retail sales go offshore from Australia," says John Debrincat, CEO of eCorner. "This is a disheartening statistic but also a huge opportunity. Online retailers like dealsdirect.com.au, catchoftheday.com.au and oo.com.au have been very successful. But there are traditional retailers also showing that multichannel [online] works, like Dick Smith, Clive Peeters and Big Brown Box [Radio Rentals]. "The accessibility of the internet, minimal infrastructure requirements and an abundance of tools and technologies have made the capability to sell online more affordable than ever. However, the "art" of multichannel lies in the intelligent integration of traditional retail channels (bricks-and-mortar stores, catalogues, direct mail, and so on) with the online platform. "True multichannel is complex, takes time and needs to be done in stages," says Andrew Powell, a director in Deloitte's multichannel consulting practice. "True multichannel is transformational; it requires buy-in from all business functions and enterprise-level sponsorship. Design starts with the customer experience, not the technology, organisation structures or processes. "Powell believes there are a number of retailers in the fashion sector who are demonstrating good multichannel practices now, including Peters of Kensington, Sportsgirl, Rebel Sports, Peter Alexander and Dotti. Andrew Powell, a director in Deloitte's multichannel consulting practice. "Common themes in these businesses are a distinctive customer engagement 'voice' and innovation in the creation of a sense of community and loyalty around the brand and the offer," he says. "Specifically, they often employ rich media to create an interesting customer experience online, which they then seek to replicate in-store. "In order to emulate the successful multichannel integrated strategies of these brands, Powell suggests focusing on four key areas of consideration. First, a retailer must clearly articulate the desired customer experience in any / all channels. "Based on the value proposition for targeted customer segments, this is the template on which the 'offer' across all channels is based," he says. "It drives the features, look and feel, pricing, promotions strategy and operations in each channel to meet a common desired customer engagement outcome. "Second, a retailer must design operations for multichannel. This will include, for example, new roles that support the co-ordination of merchandising, promotions and pricing across multiple channels and a single point of control for cross-channel decisions. Third, give the established channels a sense of customer ownership in the new channels. "Retail store operations or field sales staff are often concerned about revenue leakage and cannibalisation when new channels are brought on stream," says Powell. "Effective multichannel design tracks these customers and ties them back to the store in their location. The stores are then recognised for the revenue in the new channels and encouraged to consider and take 'ownership' of their customers in whatever channel they engage in. "Finally, from a customer relationship management perspective, Powell says that a single view of the customer must be made available to all channels. In simple terms, the systems and processes that record information and provide intelligence on customers online and offline should be the same. It's what the customer will expect. "Consumers are, by nature, multichannel," says Kevin Mackin, general manager of Coremetrics, Australia and New Zealand. "It's just the technology that changes. Marketers need to take this on board and think more broadly about their strategies - it is not rocket science and the basic marketing principles still apply. Kevin Mackin, general manager of Coremetrics, Australia and New Zealand. "Mackin agrees that consistency of the marketing communications across all channels is vital. The key to multichannel success, he says, is to maintain a common message and persona and at the same time maximise the advantage that each channel brings to personalise your message to the customer. "Leveraging customer profile information across channels is a huge trend," he says. "Use what you know about a client's online relationship with your business to promote a cross-sell in-store or through a call centre. Finding a way to leverage the personal relationships that clients have in-store when they come online or through the call centre is much more difficult but companies that do focus on creating an engaging, personalised customer experience online will do well. "The scope for creating that engagement online is infinite, from blogs to product ratings / reviews and from video to augmented reality and beyond. As technology advances, more and more of the tools once reserved for the big-budget players are accessible to small- to medium-sized businesses. Social media, too, play a major role in successful multichannel retailing, adding another powerful marketing element. As the popularity of Twitter, Facebook and the like gains momentum, retailers are turning to these channels as a means of connecting with and providing customer service to consumers. The opportunities to leverage the online platform to extend retail reach are endless. "The truth is that you can sell anything online but it may mean making a few changes," says John Debrincat. "McDonagh's butcher shop, an institution in the Ryde area of Sydney, has now been successfully selling online for over a year. Its e-store, www.themeatboutique.com.au, was overwhelmed by orders online last Christmas. The company's multichannel strategy has seen orders come from as far away as the Blue Mountains and has also seen the shop supply to the corporate market, all because the butcher is found online. "At the other end of the spectrum, large retailers like Dick Smith use the online channels not only to capture the pure online buyer but also to drive in-store traffic. Successful multichannel strategies involve and improve all the channels. "As the world of online retailing continues to grow, so too does the threat to the Australian market from overseas competitors. It's imperative, according to the experts, that the customer experience from beginning to end, including shipping and customer service, is of the highest quality. "Offer the simplest shipping method; in Australia, it's by Australia Post eParcel," says Debrincat. "It's ideal for packages up to 20 kilograms. If you are in the perishables business, such as meat or dairy products, then offer delivery in a known geographic area. "Payment online is simple and you can accept credit cards safely using a payment gateway like eWAY or PayPal. But you can also offer pickup and pay in-store. There is nothing wrong with ordering online and having the customer pick up and pay - this is a growing trend. "Debrincat says a major challenge for businesses can be the management of stock and orders. "Existing retailers often have their point-of-sale systems that control the cash register, barcode scanner and EFTPOS. To be effective, the multichannel approach needs to be integrated into the business systems and processes. "Once the basic logistics have been addressed, it's time to integrate and take full advantage of the multichannel opportunity. Australian online spending is predicted to grow by approximately 5.5 per cent annually for the next five years - from $15.1 billion in 2007-08 to $21.2 billion during 2013-14, according to IBISWorld. "Having products online enhances sales in the bricks-and-mortar store and can improve your image and reach," says Debrincat. "By promoting your online channel, more people will find you and your stores. You may even reach new demographic, and possibly geographic, markets." Top

Issue 50

The great cyberspace race

Published Date: August 2010

From major department stores to the local butcher, online retail is a major growth area. The advantages are infinite, the risks minimal - what is any retailer waiting for?

The multichannel boom has well and truly arrived, with Australian consumers increasingly turning to the internet for browsing and buying.

While multichannel retailing - in the online sense - is still in its infancy in Australia, huge opportunities exist for businesses to capitalise on the low barriers to entry to e-commerce.

The sector is rapidly burgeoning, enough to place online retail in economic forecaster IBISWorld's top 10 predicted growth categories for 2010. According to the latest IBISWorld Industry Report, online retail in Australia is expected to grow 4.7 per cent in 2010, reaching $20 billion in revenue and placing it eighth on the list of predicted growth industries - the highest-ranked sector of retail.

However, according to some experts, the local industry has had a sluggish start compared with that in many other developed countries and there is a serious threat of losing market share to overseas competitors. The time to act is now.

"More than 45 per cent of all online retail sales go offshore from Australia," says John Debrincat, CEO of eCorner. "This is a disheartening statistic but also a huge opportunity. Online retailers like dealsdirect.com.au, catchoftheday.com.au and oo.com.au have been very successful. But there are traditional retailers also showing that multichannel [online] works, like Dick Smith, Clive Peeters and Big Brown Box [Radio Rentals].

"The accessibility of the internet, minimal infrastructure requirements and an abundance of tools and technologies have made the capability to sell online more affordable than ever. However, the "art" of multichannel lies in the intelligent integration of traditional retail channels (bricks-and-mortar stores, catalogues, direct mail, and so on) with the online platform.

"True multichannel is complex, takes time and needs to be done in stages," says Andrew Powell, a director in Deloitte's multichannel consulting practice. "True multichannel is transformational; it requires buy-in from all business functions and enterprise-level sponsorship. Design starts with the customer experience, not the technology, organisation structures or processes.

"Powell believes there are a number of retailers in the fashion sector who are demonstrating good multichannel practices now, including Peters of Kensington, Sportsgirl, Rebel Sports, Peter Alexander and Dotti.

Andrew Powell, a director in Deloitte's multichannel consulting practice.

"Common themes in these businesses are a distinctive customer engagement 'voice' and innovation in the creation of a sense of community and loyalty around the brand and the offer," he says. "Specifically, they often employ rich media to create an interesting customer experience online, which they then seek to replicate in-store.

"In order to emulate the successful multichannel integrated strategies of these brands, Powell suggests focusing on four key areas of consideration.

First, a retailer must clearly articulate the desired customer experience in any / all channels. "Based on the value proposition for targeted customer segments, this is the template on which the 'offer' across all channels is based," he says. "It drives the features, look and feel, pricing, promotions strategy and operations in each channel to meet a common desired customer engagement outcome.

"Second, a retailer must design operations for multichannel. This will include, for example, new roles that support the co-ordination of merchandising, promotions and pricing across multiple channels and a single point of control for cross-channel decisions.

Third, give the established channels a sense of customer ownership in the new channels. "Retail store operations or field sales staff are often concerned about revenue leakage and cannibalisation when new channels are brought on stream," says Powell. "Effective multichannel design tracks these customers and ties them back to the store in their location. The stores are then recognised for the revenue in the new channels and encouraged to consider and take 'ownership' of their customers in whatever channel they engage in.

"Finally, from a customer relationship management perspective, Powell says that a single view of the customer must be made available to all channels. In simple terms, the systems and processes that record information and provide intelligence on customers online and offline should be the same. It's what the customer will expect.

"Consumers are, by nature, multichannel," says Kevin Mackin, general manager of Coremetrics, Australia and New Zealand. "It's just the technology that changes. Marketers need to take this on board and think more broadly about their strategies - it is not rocket science and the basic marketing principles still apply.

Kevin Mackin, general manager of Coremetrics, Australia and New Zealand.

"Mackin agrees that consistency of the marketing communications across all channels is vital. The key to multichannel success, he says, is to maintain a common message and persona and at the same time maximise the advantage that each channel brings to personalise your message to the customer. "Leveraging customer profile information across channels is a huge trend," he says. "Use what you know about a client's online relationship with your business to promote a cross-sell in-store or through a call centre. Finding a way to leverage the personal relationships that clients have in-store when they come online or through the call centre is much more difficult but companies that do focus on creating an engaging, personalised customer experience online will do well.

"The scope for creating that engagement online is infinite, from blogs to product ratings / reviews and from video to augmented reality and beyond. As technology advances, more and more of the tools once reserved for the big-budget players are accessible to small- to medium-sized businesses.

Social media, too, play a major role in successful multichannel retailing, adding another powerful marketing element. As the popularity of Twitter, Facebook and the like gains momentum, retailers are turning to these channels as a means of connecting with and providing customer service to consumers. The opportunities to leverage the online platform to extend retail reach are endless.

"The truth is that you can sell anything online but it may mean making a few changes," says John Debrincat. "McDonagh's butcher shop, an institution in the Ryde area of Sydney, has now been successfully selling online for over a year. Its e-store, www.themeatboutique.com.au, was overwhelmed by orders online last Christmas. The company's multichannel strategy has seen orders come from as far away as the Blue Mountains and has also seen the shop supply to the corporate market, all because the butcher is found online.

"At the other end of the spectrum, large retailers like Dick Smith use the online channels not only to capture the pure online buyer but also to drive in-store traffic. Successful multichannel strategies involve and improve all the channels.

"As the world of online retailing continues to grow, so too does the threat to the Australian market from overseas competitors. It's imperative, according to the experts, that the customer experience from beginning to end, including shipping and customer service, is of the highest quality.

"Offer the simplest shipping method; in Australia, it's by Australia Post eParcel," says Debrincat. "It's ideal for packages up to 20 kilograms. If you are in the perishables business, such as meat or dairy products, then offer delivery in a known geographic area.

"Payment online is simple and you can accept credit cards safely using a payment gateway like eWAY or PayPal. But you can also offer pickup and pay in-store. There is nothing wrong with ordering online and having the customer pick up and pay - this is a growing trend.

"Debrincat says a major challenge for businesses can be the management of stock and orders. "Existing retailers often have their point-of-sale systems that control the cash register, barcode scanner and EFTPOS. To be effective, the multichannel approach needs to be integrated into the business systems and processes.

"Once the basic logistics have been addressed, it's time to integrate and take full advantage of the multichannel opportunity. Australian online spending is predicted to grow by approximately 5.5 per cent annually for the next five years - from $15.1 billion in 2007-08 to $21.2 billion during 2013-14, according to IBISWorld.

"Having products online enhances sales in the bricks-and-mortar store and can improve your image and reach," says Debrincat. "By promoting your online channel, more people will find you and your stores. You may even reach new demographic, and possibly geographic, markets."

Top