Traditional Australian retailers are not moving quickly enough after Deloitte found that some of the most successful start-ups are online retailers.
As part of its ‘Move quickly to capitalise on online retail’ report, Deloitte found that Grays Online, Catch of the Day and Ozsale are all online retailers that have been courted by venture capital style investors over the last 24 months. The result was two out of them have taken money from offshore investors who have seen the online retail potential unfold elsewhere in the world.
Damien Tampling, Deloitte national leader – technology, media & telecommunications, said in the finding that there was no traditional retailer in sight.
“In addition, whilst local online sales represented four per cent of all retail activity in Australia last year, there was another half again going to online businesses offshore. This means traditional retailers are getting disrupted in certain categories by both local start ups and more established offshore players,” he said.
“Unless our Australian retailers get moving, they will find it much more difficult to take advantage of this new channel, as consumers align themselves to new, alternative brands online.”
However, Tampling notes that strategic innovation for traditional retailers does not come easy as it can require a fundamental rethink about their business.
“Traditional retailers must realise that in this new world they may well require a new brand and a new model that leverages their strengths, but operates independently. Our Aussie retailers can’t take a ‘wait and see’ approach on this one as they are already getting left behind,” he said.
“A rapid, small, but still meaningful investment in the space, is better than waiting for a perfect model that fully integrates with the supply chain, franchise model or in-store POS.”
As part of the re-evaluation of a business to prepare it for the online retail space, five areas that should be looked at are:
- Develop a focused product strategy and roadmap identifying which products you will start with online and why, and determining how your offering will evolve.
- Think through the best inventory management model – what works offline is often very different to what works online.
- Create a plan for how the business will engage with suppliers – will the dynamic change as a result of your online strategy?
- Determine a business model that can move quickly and innovate constantly.
- Market in the new way:
- Where relevant, think about the multi-channel not just the online channel.
- Develop a detailed plan to better leverage or build customer data to create very targeted and relevant customer interactions.
“Unlike the physical world, the internet obviously lets you change your whole store layout and product set for every single visitor. Therefore collecting and understanding your customer data is key. And so too are smart product and marketing partnerships that provide something unique to consumers, while minimising very specific risks,” Tampling said.