Reticent retailers ignoring online opportunities
The latest CommBank Retail Insights Report reveals online transactions have increased by 61 per cent for multi-channel retailers since August 2015, when the bi-annual study was first taken, and now account for 29 per cent of all industry sales by volume.
Multichannel retailers predict this figure will rise to 35 per cent over the next 12 months.
The rate of online sales is surging ahead of expectations and will account for more than a third of multichannel retailers’ sales by 2018, according to CBA.
“Retailers maintain a bullish outlook for online sales and yet may be underestimating future growth, as they have previously,” said Jerry Macey, national manager, Retail Industry, Commonwealth Bank.
“They forecasted 24 per cent growth during 2016 compared to actual growth of 32 per cent.”
“And to maintain their growth, retailers continue to adjust their strategies to adapt to changing market conditions such as the pending arrival of Amazon.
“We are seeing the more conventional digital marketing and sales channels like email and mobile apps drop off considerably, as retailers focus on those channels that are not only the most profitable, but can actually improve customer engagement, convenience and foster loyalty.”
The study of retail channels to market also shows only one in five merchants use third party sites to attract customers; likely to increase as they ready for the local arrival of Amazon.
“Only a fraction of retailers are leveraging third party sites as a sales channel currently, and we expect that may change as Amazon’s platform rolls out in Australia,” said Macey.
“Our research shows that 11 per cent of retailers see Amazon’s entry as an opportunity and of these businesses, the vast majority (68 per cent) see the potential for new sales channels.”
While a company owned website remains the primary online sales channel for most retailers, 22 per cent are using third party websites to sell products and only seven per cent of Australian retailers are using third party sites as their sole sales channel.
“There is significant potential for more retailers to look at third party sites as a viable sales channel, rather than adopting a purely defensive stance,” said Macey.
Email, social media and mobile apps have become significantly less popular among both multichannel and pure play online businesses over the last 12 months, with more retailers now using live chat to enhance customer service.
The research also found a small number of retailers are also using chat bots to service customers.
Improving delivery and return services has also remained a top priority for retailers seeking to capitalise on growing online sales volumes. ‘Click and Collect’ is now being offered by 42 per cent of retailers, up from 24 per cent in August 2015. Similarly, 38 per cent of retailers now allow shoppers to return online purchases in-store, up from 23 per cent only 18 months ago.
“Innovation remains a key driver of optimism in the industry,” said Macey.
“For one in three retailers expecting better times ahead, they say changing strategies and business models, and introducing new initiatives, are more important than simply relying on economic growth.”
Access exclusive analysis, locked news and reports with Inside Retail Weekly. Subscribe today and get our premium print publication delivered to your door every week.
Inside Retail Polls
Inside Retail Directory
Department store chain files for creditor protection, but says it will emerge as a going concern after a restructure https://t.co/UkRO9njBVa19 hours ago