Australia’s top 10 online retailers 2011
The past 12 months have seen a revolution in the online retailing sector.
Emerging players such as DealsDirect, Catch of the Day and OzSale dominate Australia’s top 10 online retailers and the past year has seen Australia’s big retailers finally start to take online selling seriously.
Major department stores Myer and David Jones have started selling online, Woolworths’ online sales are growing at a rate of 75% and a group of retail veterans, led by Solomon Lew, has become so concerned at the rise of e-tailing that it wants to impose a new tax for overseas online sales in order to push shoppers back towards physical stores.
Even Gerry Harvey publicly admitted he was wrong about online.
“I think online retail is changing at a very fast pace,” Daniel Jarosch, chief executive of top 10 operator BrandsExclusive says. (To see the full top 10 list, click here.)
“We’ve seen the entrance of a lot of new models, we’re seeing the emergence of social commerce … and we’re seeing a lot of new categories coming online.”
And while DealsDirect chief executive Paul Greenberg won’t go so far as to say it’s a “tipping point” for online retail he nevertheless believes it to be an exciting time for online businesses and shoppers alike.
“During the last three or four months it’s been easy to get caught up in the excitement and enthusiasm. It may not be a tipping point but the offline retailers are certainly saying this is even bigger than they thought initially,” he says.
The big guys get serious
Perhaps the biggest sign that online retail is being taken seriously was the launch of web stores for giants David Jones, Myer and Westfield. Those bastions of brick and mortar have started selling online and by all accounts they’re doing very well so far – Myer and Westfield are some of the most popular shopping sites in the country according to Hitwise.
Others are doing well too. Auction house GraysOnline is turning over $300 million and Woolworth’s said in its latest financial report that online sales across its group have grown by a whopping 75%.
JB Hi-Fi, which says its online store is only a small component of its business, recorded a 39% increase in online sales in the second half of 2010.
Recent research from Forrester shows there are 9.9 million Australians shopping online and that’s growing at 1% every year, which means there will be 100,000 new buyers this year alone.
Older figures suggested online sales made up only 2-3% of retail as a whole but Forrester says that figure is more like 7% and it’s continuing to rise. Online sales growth will continue at 10% every year until 2015.
The growing market has provided fodder for a large number of fast-growing start-ups, such as Shoes of Prey, which are taking full advantage of Australia’s appetite for online buying.
The right price point
There are many factors involved in the growth of online retail but one of the majors is price – it’s never been cheaper to buy on the internet.
With consumers still holding onto their cash it makes sense that people would start researching online for better prices. The most popular shopping site after Amazon and eBay is GetPrice, an online price aggregator, according to Hitwise, highlighting just how price conscious online buyers are.
But the appetite for price has a downside. As the Australian dollar rose above parity with the US last year many online shopping dollars went offshore.
Research from PayPal last year shows 40% of dollars spent online in Australia are used on sites based overseas, where prices can be as much as 50% lower than in Australia.
According to Hitwise eBay Australia is in the top spot for auction sites and classifieds, eBay.com follows closely in second place and Amazon.com is third.
Various other international sites, including the Apple Store, Etsy and the Book Depository, are popular as well.
The attraction is that products on those sites are usually heavily discounted and they avoid GST provided they are priced under $1,000 – a fact the Australian retail industry has taken issue with.
The Retail Coalition, formed by retail veterans including Bernie Brookes, Solomon Lew and Gerry Harvey, want the government to start taxing online sales at 10% or do away with the GST entirely.
They claim they want a “level playing field” and that by allowing online sales to go untaxed the domestic retail industry is being put at risk.
National Retailers Association executive director Gary Black has publicly stated that “the Australian community will pay an escalating price for the failure to address this blatant inequity”.
But online entrepreneurs here, such as JB Hi-Fi chief executive Terry Smart, say the issue isn’t clear cut.
“This issue was raised around the end of November/early December and at that time it was really the last thing on our mind. The 10% mark is not an issue because right now there is a bigger price discrepancy than 10%,” he says.
“You know attacking GST is not going to be the solution to the problem. It is a small part of it yes, but it is not the main issue.
“I just feel that over time the suppliers, the retailers and so on, will work it out. We may see more sense in global pricing in the future.”
Greenberg agrees, saying: “We pay income tax, payroll tax and so on. We are more than happy with the way we are tracking so I don’t think the 10% call is an excuse. That is not the ball game.”
Where to now?
Online retail has come a long way. But we’re still a fair way off some advanced economies such as the United States, so what’s it going to take to make sure Australian online retail pushes forward to the next level?
The experts say it’s time retailers stopped believing it’s all about price. While that’s one of the main factors pushing dollars overseas a variety of other factors are much more important.
GetPrice has found that while price is one of the most important factors when buying online buyers value a range of different metrics – customer service, familiarity and user ratings.