Online consumer market targeted by US retailers

JUNE 2010
WEB retailers are operating under the guise of Australian ownership and reaping sales from domestic online consumers.

Key figures in Australia’s developing online retail sector are calling for industry action.

In response to the survey by US-based organisation Internet Retailer, almost 40 per cent of web retailers ranked Australia in their top three markets for generating web sales outside of the States.

Local figures released by Forrester Research indicates Australian online spending is expected to grow to $32 billion within two years, though research by the Australian Payments Clearing Association shows only 57 per cent of this spending is domestic.

The US is a hunting ground for savvy consumers to import a diversity of products and brands.

Local online entrepreneur Melissa Hoekstra‘s company Supercool Toys is the largest Australian stockist of the popular German toy brand Mobilo.

While the majority of Hoekstra’s sales come from the local market, she has seen first-hand how international retailers pouch online sales revenue from local companies.

Hoekstra says two of her largest competitors use Australian registered domain names (com.au) to generate sales for US parent companies and consumers don’t realise until the final checkout process.

“There are a couple of (Australian) sites that promote only products that can be purchased overseas. It would be nice if they supported Australian businesses,” she says.

“I think consumers would know that they are purchasing from overseas companies, though not until the end of the transaction. Perhaps they are unaware right up to when they get to the postage conditions.”

Australia’s Online Retailer Expo & Conference managing director Mark Harvey, says more retailers need to ask themselves why Australian consumers are behaving this way and buying offshore. It’s time he says, for Australian online retailers to pick up their game.

“A whole new generation of consumers have taken control and are changing the game for the retail industry,” says Harvey.

“With access to a wealth of information online, customers are speaking to us loud and clear by putting their credit cards on the line and transacting.”

Harvey says feedback from last year’s annual Sydney conference is a clear indication that the Australian market has a ‘yawning knowledge gap’ in local e-commerce best practice.

As one of Australia’s major retail hubs and the home of many online entrepreneurs, the results are a serious cause for concern on the Gold Coast.

Head of e-commerce at online electrical retailer Bing Lee Peter Krideras, says tech-savvy consumers reluctantly have to support international businesses because they’re starved of brand choice.

“The delay in Australian retailers embracing selling online has made it easy for overseas ventures to tap into the Australian market,” says Krideras.

“The quicker Australian organisations embrace the power of the web, the quicker we can capture this growing market before we lose more money overseas.”

So how do online Australian companies better compete with the overseas big guns? A good question says Hoekstra.

“The only way really is to promote Australian-owned businesses and hope the consumer sees the convenience of purchasing locally,” she says.

“It comes down to your marketing strategy and really pushing the question of ‘why would you want to shop with overseas retailers when you can shop with us’ (Australia)?”