Online retail war heats up as international retailers target Australian shoppers, experts urge local SMEs to innovate

Proof that international retailers are now fighting for Australian dollars has finally appeared, with US department store Sears launching a 20% discount offer specifically for Australians in the lead-up to Christmas.

The deal comes as the local retail industry continues to debate over the merits of introducing a GST for online sales, as heavyweights become more concerned over the amount of money heading overseas due to the strong Australian dollar – which now sits at US97c.

Australian Retailers Association executive director Russel Zimmerman says local retailers need to start using technology to innovate and draw Australian dollars back into the local market.

“There are plenty of people combating international sales from a perspective of being on the internet. It’s all about being creative,” he says.

On its official website, Sears targets the 20% discount specifically towards Australians with a graphic featuring the Australian flag. The promotion is a Christmas-specific offering, with the company promising goods to be delivered by the holiday if booked by December 1.

But Sears isn’t the only company targeting international buyers; Wal-Mart has just dropped its international shipping fee and theoutnet.com ran a free shipping campaign over the weekend. Shoes retailer Asos has also recently introduced shipping to Australia.

As Kevin Moore points out in his blog today, online retail is becoming more competitive as American and British retailers leverage the strength of the Australian dollar, arguing this Christmas will be a big test of that market.

And other experts warn that unless Australian online retailers step up, they’ll be left behind.

Reseo chief executive Chris Thomas says the Australian market is saturated by discounts, but he argues purely lowering the price won’t bring people online.

“Discounting is one angle a lot of these companies go for, but that’s only one element… It’s a customer service thing, so you need to be giving some sort of value, an extended warranty or something like that.”

Thomas pins shipping as the key point here. With international retailers offering free or discounted delivery, it is often cheaper for Australians to buy products overseas and then wait a few weeks to receive them. On the other hand, shipping in Australia is often much more expensive and can often take just as long.

But Thomas says local retailers actually have an advantage.

“The thing is, you have a shipping advantage here. No international retailer can get something to you tomorrow. You have a competitive shipping advantage here and you need to use it. It costs more, but you can get around that by developing a good business plan.”

Stewart agrees, saying Australian retailers need to start thinking about how they can develop a business model that will allow for free and immediate shipping.

“Quite often I will look for a local supplier if I want something in a hurry. If you’re a local supplier and you don’t have 20-hour turnaround, then you may want to consider that. You order something from Amazon these days and it can get here in a matter of days – order in Australia and it may take weeks.”

Stewart also warns there is a big SEO element in making sure your online store is seen by local users.

“They have to consider this because with the click of a mouse button, they can find the best deal and buy it. The research you have now is so much better, and you have to convince people that you’re providing a better service.”

“The disconnect a lot of website owners have locally is that they don’t even think there is opportunity out of their own region. Local businesses can be selling anywhere in the world. With the Australian dollar as it is now, things are just so much cheaper.”

But Australian retailers are catching up. Just over the weekend electrical retailer the Good Guys launched its online store, and Zimmerman says there are plenty of Australians offering features like free or discounted shipping.

“I think we have to realise that we’re in a competitive environment and we’re part of a global economy. I think this shows how much more people are online and that’s obviously a much larger amount of people using the internet to shop.”

“But there are people doing really interesting things. If you look at Kogan, they are producing good products at significantly lower prices and making a name for themselves, and they are offering a completive product.”

Russel says the ARA will still be pushing for more regulatory oversight for the $1,000 GST import threshold, but also warns retailers that just introducing the GST won’t be enough to keep Australian dollars at home.

“If you look at Sportsgirl, they are offering a model where you can shop online and put clothes on a digital model and see how they look. You’ve got people doing these interesting things and that is what makes them competitive.”

“There are retailers out there doing smart stuff, and there is an opportunity there for the retailers here to be marketing themselves to the rest of the world.”

Thomas warns that retailers need to start making their products exclusive and offer the same type of service as they would in-store. “If you’re trying to compete internationally, it’s really tough unless you have some exclusivity around your product. It would be highly desirable to try and do so.”