Tyranny of distance hindering Aussie online retail: Report

A new report on global retailing reveals Australia is lagging behind in online shopping, with geographic isolation significantly hindering the delivery of goods.

Property market analyst firm CB Richard Ellis recently released its 2011 edition of How Global is the Business of Retail? The report findings are based on a survey of 323 of the world’s leading retailers.

According to the report, 82% of global retailers have an online catalogue for consumers to browse, but only 75% of global retailers in Australia have a website.

Kevin Stanley, CBRE executive director of global research and consulting, says this is relatively low by global standards, comparing Australia with the United Kingdom where 90% of global retailers have such a facility.

Stanley says Australia’s poor performance in this regard is partially driven by its geographic isolation from international markets, arguing this can restrict retailers’ online capabilities.

“The percentage of retailers… that have the ability to deliver goods bought online is still quite low,” he says.

“The effective distribution of goods bought online is a key challenge for retailers and one that was yet to be resolved.”

The report reveals consumers can purchase and take delivery of goods from only 26% of the retailers surveyed, with value and denim retailers leading the way due to a low price offer and the ability to provide further discounts across a range of markets and consumer types.

Mid-range fashion retailers, and luxury and business fashion retailers, are also likely to operate a delivery service.

Geoff Huens, co-founder of Australian beer retailer Beer Cartel, says delivering throughout Australia is hard enough, let alone the rest of the world.

“Australia’s such a big country… so you’ve got heavy products going quite long distance. We use Australia Post and their eParcel system, which effectively means they deliver to pretty much every address in Australia,” he says.

Leigh Williams is the founder of eStore logistics, which provides end-to-end third party logistics services to both online and offline businesses.

He says he saw an opportunity to fill a gap in the Australian logistics industry based on his own bad experience.

“When I was working in my graduate job at IBM, I was selling imported goods on eBay. It got to the point whereby I was working in my job for 10 hours per day and having to get up at 4.30am every morning before work to pick up and pack eBay orders and send them out to my customers,” Williams says.

“I searched around for a company that was specialised in logistics for online-based consumer orders. However, all of the big logistics companies’ systems and processes were geared toward fulfilling large orders to retail stores.”

Williams says he uncovered articles describing the issues plaguing online retailers with regard to their logisitics functions, which inspired him to start his business.

In addition to delivery woes, the latest eBay Online Business Index reveals almost 80% of Australia’s largest eBay sellers have experienced difficulties with manufacturers and suppliers.

One of the findings from the report, which surveyed 357 top eBay sellers, was that respondents have experienced pressure or restrictions from suppliers and/or manufacturers who do not wish to fall out of favour with traditional retailers.

Deborah Sharkey, eBay managing director for Australia and New Zealand, says restrictive practices by manufacturers and wholesalers mean local businesses are unable to offer the full range of goods their customers want.

In addition to restrictive trade practices, survey respondents identified a swag of other barriers to growth including postage costs.