Online businesses still under pressure from suppliers, eBay Index reveals

The retail supply wars continue, with suppliers still pressuring over one-third of businesses to stop selling products online, according to the latest figures from the eBay Online Business Index.

The index also reveals 55% of respondents believe postage costs are a major obstacle to growth – just days after Australia Post confirmed it will raise prices by an average of 3.8%.

The eBay survey of the company’s 387 top sellers within Australia, with annual sales from between $66,000 to $4.7 million, found that more businesses are optimistic about trade in 2012.

The top 2000 sellers saw their revenue grow by 45%, with 160 businesses topping $1 million in annual sales, up by 31% from the previous index.

However, 34% said they have been put under pressure to stop selling goods online from some suppliers, compared to 35% in the 2011 survey.

“Incumbents are often uncomfortable with change,” eBay Australia managing director Deborah Sharkey told SmartCompany.

“Obviously ecommerce is driving unprecedented change and I like to underscore this is a consumer-led change. They want this convenience. And obviously with that comes a lot of challenges and complexities.”

SmartCompany revealed in January that several businesses have been approached by suppliers and manufacturers to stop selling goods online, or sell them at a certain price. The Australian Competition and Consumer Commission has been cracking down on this practice, known as “retail price maintenance”.

But the survey also reveals shipping costs are a major point of contention for online retailers, with 55% of respondents saying it’s a barrier to growth. This comes just days after Australia Post confirmed it would be raising postage costs by an average of 3.8% for parcels and bulk mail services.

Australia Post said it would increase investment in new postal services, a move Sharkey applauds, although she says the industry has “more to do”.

“Shipping is the number one priority for consumers and retailers, it’s the leading pain point and it’s the largest thing businesses are asking for – affordable shipping rates, tracking capabilities, and the ability to integrate shipping information onto their own websites.”

Sharkey says businesses want standardisation and Australia Post has more to do in giving online retailers the best deal possible.

“We applaud the way Australia Post is investing in 24/7 superstores, but there is still room to go.”

“We’d encourage the Government to give logistics providers the incentives and flexibility to invest in more growth.”

The survey revealed more businesses have focused on mobile, with 28% saying slow internet speeds are a barrier to growth in mobile commerce, along with 24% citing unreliable coverage and 21% citing mobile internet usage.

Six out of 10 businesses also said this year will be the first they invest in mobile, while 46% said they would optimise content for mobile devices.


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