Computer manufacturer Dell now sells products through its Facebook store, with countless companies using Twitter as a customer service channel. Others use Facebook as a basis to connect with younger demographics, and offer exclusive deals and coupons.
“If you go to Country Road, for example, they have a Facebook fan page, people blog and write about them, IKEA is on Facebook, you can buy computers through Dell on there, and there are so many ways of keeping connected. The market is really changing from broadcast to narrow-cast, focusing on personalisation,” Walker says.
And while he maintains offline retailing will still have its place, he maintains the clear trend is for businesses to start moving online – and fast.
“This is going to emerge instead of putting catalogues in the mail. They will still have their place, but increasingly it’ll be about communication online. Retailing is now about bundling offers, integrating them and making them speak to each other. Whoever looks at your website should see the same thing in store, and social media helps to boost that.”
The top 10
These top 10 retailers are the group making the most of the market. The list was compiled using a combination of Hitwise and Nielsen traffic figures, revenue figures where available and an assessment of the company’s level of innovation.
DealsDirect is the biggest online department store in Australia. Founders Paul Greenberg and Michael Rosenbaum regularly boast about their huge 40,000 square metre storage area, housing everything from bedspreads to kitchenware. The company has 120 employees.
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The site is immensely popular, recording the highest brand recall out of any Australian shopping site at 14%, according to Hitwise. Its biggest drawing card is its bargains, with the site constantly updating new products with low prices.
While Greenberg says that “numbers are just numbers”, the site’s annual revenue of just under $100 million shows DealsDirect is a serious player in the world of Australian online retail.
Catch of the Day
Australia has been hit with a wave of sites based on the successful US site Woot.com, with business selling only one product per day until sold out. Catch of the Day differs slightly by offering products from other sections of the site at once, but it is undoubtedly the most successful site of its kind operating in the country.
Co-founded by Gabby Leibovich, the site is the fifth most popular shopping and classifieds site in the country. The company has also moved across into New Zealand, and is planning to launch spin off sites shortly.
Catch of the Day is set to record $60 million in revenue for the current financial year.
Apple has dominated the digital music market with iTunes for years, and globally is the most significant player. But BigPond Music has managed to overtake it as the most popular digital music site in Australia, according to the most recent Hitwise data.
BigPond is certainly attractive. It offers a similar pricing structure to Apple, without the digital rights management issues. There are discounts for BigPond members and it is a fairly simple site to navigate. While Apple is surely getting the majority of sales, the amount of traffic going BigPond’s way indicates this is a growing business.
Along with its DVD rental offers, Telstra could be well on its way to establishing itself as one of the biggest online retail forces in the country.
Oo, another department store, opened in 2005 and offers thousands of products in dozens of different categories. Once again, its message is simple – to offer the cheapest price possible. During 2008-09, the company recorded $30 million in revenue.
While the company would not reveal too many details for recent figures, it said the last four months have seen average year-on-year growth of 38%, and that traffic has doubled in the same period.
This private online shopping club sells a range of items, but specifically focuses on fashion. It works by announcing a sale every morning which runs for a limited amount of time, usually a few days. Members are able to shop for the merchandise, which is usually heavily discounted, and even earn gift vouchers for every friend they have register who makes a purchase.
Extremely popular among fashion fans, OzSale record revenue during 2008-09 of about $20 million.
About 18 months ago, outgoing JB Hi-Fi chief executive Richard Uechtritz said the company’s site delivers a small amount of revenue compared to the business overall and he would be cautious in considering how much money to invest in the online shopfront.
But since then, sales have soared and JB may be taking its online presence more seriously. The chian which offers DVDs, CDs and a range of consumer electronics, is most popular among younger shoppers who are also spending more time browsing online stores.
JB Hi-Fi recorded growth in revenue from $1.26 billion to $1.55 billion during the first half of the current financial year. While Uechtritz maintains the percentage contribution from online is still “quite small”, even a 1% figure still provides $15 million in overall sales.
Few websites survived the dotcom bust, but department store Dstore is one of them.
Founded originally by David Gold, current chief executive Andrew Cooper took over in 2001 after the site nearly went bust. It has revenue of about $10 million, but Cooper isn’t just satisfied with dominance online – he plans to open physical retail Dstore sites over the next few years.
BigPond DVD Rental
The online DVD rental market has exploded in the US, but Australian audiences have been slower to catch on. Now, it seems, the trend may be here to stay.
BigPond offers a number of different subscriptions whereby users request a number of DVDs, receive them in the mail and then send them back again via post. A set fee is charged each month, dictating how many films a user can rent at one time, while a “wishlist” of films is created by the user so the site automatically sends out DVDs without prompts.
It works because it’s cheap. But it may not stay on top for long – competitor QuickFlix, backed by entrepreneur Simon Baker, is quickly gaining ground.
Dick Smith has been helped out by a massive rebranding exercise over the past year, with its site given a makeover as well. The site, which offers consumer electronics, DVDs, games and consoles, electrical supplies and gadgets, is currently the fifth most popular Australian online retailer in Australia, according to Hitwise data.
It’s easy to see why Dick Smith is so popular – it’s simple to use and relatively cheap. The site also shows what products are available in local stores, prompting users to purchase online if a product isn’t available locally.
The Officeworks chain began as a fairly simple office supply chain, but its online offering has seen it upgraded into a general department store. Everything available at its bricks-and-mortar locations can be ordered online, with the benefit of some exclusive deals for electronics, especially laptops.
Five up and comers
The Australian online retail market is led by a handful of giants, but the activity is spread among a large number of smaller, independent retailers. Here are five of the biggest up-and-comers.
Founded and operated by Hal Pritchard, this site offers a variety of kitchenware, cookery and utensils from a number of different brands. Revenue was about $4.4 million in 2008-09, according to figures given by the company.
Run by Ruslan Kogan, this discount technology retailers has gained significant popularity over the past couple of years due to Kogan’s ability to quickly jump on the latest trends, whether it be the Android phone craze or tablet computers. Aggressive pricing has helped this site gain revenue of about $17 million for 2008-09.
Mark Harrison started CamerasDirect after struggling to find a decently-priced online camera shop. He says the company has found success by focusing on providing low prices, and keeping the website fresh with content on cameras and photograph in general. In 2008-09 CamerasDirect recorded $13.1 million in revenue, with 102% average growth over the past three years.
Peter’s of Kensington
Similar to Everton Online, Peter’s of Kensington originally started by focusing on kitchenware and cooking products, but it has since expanded into a broader market offering stationery, beauty products and even travel accessories.
This business, founded by entrepreneurs Adam Rockett and Chris Ryan, began by re-selling handsets in London. After an initial six-month contract, the pair expanded. The business now sells telecommunications products and accessories, exports to 78 different countries and has annual revenue in excess of $16 million.