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Niche retail powers growth in online sales

Niche retail powers growth in online sales
March 31, 2016 Marketplacer Team

Niche retail powers growth in online sales

The online retail market in Australia is now worth more than $19 billion and is set to continue growing, with smaller retailers in categories such as homewares, personal and recreation, and fashion right in the mix with the big players.

The December 2015 quarter NAB Onlines Sales Retail Index in-depth report estimates the Australian online retail market was worth $19.1bn in the 12 months to December 2015.

A notable aspect of the NAB report was its concentration on the growth of smaller online retailers, who continued to punch above their weight in terms of online sales relative to bigger players, with 37% of total online retail sales being recorded by small to medium-sized retailers.

The report highlighted the strength of SME retailers especially in the categories of fashion, homeware and appliances, and personal and recreational.

The three categories with the highest share of online spend were homewares and appliances (21%), groceries and liquor (18.2%), and media (16.1%).

The CEO of online marketplace House of Home, Stephen Jones, says smaller retailers perform well in the homewares category because they are often more in touch with what shoppers want in terms of products and trends.

“The rise and rise of the digitally savvy consumer is providing an incredible launching pad for SME retailers to compete on an even playing field with the traditional big box retailers, providing they are accepting of the importance of omni-channel, or as I like to call it, simply being consumer focused,” says Mr Jones.

“Deliver your products to consumers in a way they want it and they will buy it. It’s a simple strategy and it works evidenced by the increased in store and online sales growth we see across all product categories from over 500 retailers we have advertising over 40,000 products in our marketplace.”

An IBISWorld report, titled Online Shopping in Australia, estimates an annual growth rate of 16.5% for the online retail industry between 2011-16, with 44,429 online retail businesses employing around 62,200 people.

The summary of the IBISWorld report says online retailing has seen “a paradigm shift in the way consumers make transactions. The industry has grown dramatically over the past five years, to become part of the mainstream retail trade division.”

While some traditional bricks-and-mortar retailers have struggled with the shift to an online world, others have embraced the new opportunities available to them to grow their businesses and compete not only locally but also globally.

These businesses have shifted their focus to become what is commonly referred to as omni-channel retailers – businesses which integrate their various sales channels, including physical stores, website, social media, app and online marketplaces into a seamless customer-focused experience.

According to this Harvard Business Review article, shoppers now expect no less from retailers than to provide an omni-channel experience:

Omnichannel retailing is completely changing how customers interact with retailers. In today’s multi-channel environment, consumers expect a seamless approach through all shopping channels and through all forms of interaction (including on computers, with mobile devices, or at brick-and-mortar locations). Consumers expect consistent, positive experiences, where all channels have complete and accurate information about a customer’s history.

The move to omni-channel retail has often been tougher for those retailers who started out from ground zero when it came to online retail. They have had to firstly get online, create a web presence, integrate that with their existing operations, and more recently, deal with the dramatic uptake by consumers of additional sales and marketing channels such as social media, apps and specialised online marketplaces such as House of Home – which is powered by the Marketplacer online platform.

Retailers who started out as online specialists, or “pure-play e-tailers”, probably enjoyed certain advantages in regard to understanding the technical aspects of e-commerce and exploiting the relatively conservative approach of many traditional retailers, especially department stores.

That first-mover advantage for early pure-play e-tailers has started to dissipate a little as online technologies in the form of cloud computing and software-as-a-service have levelled the playing field in terms of technical adoption and capacity.

The CEO of Marketplacer, Jason Wyatt, says the technical requirements to set up as a vendor on an online marketplace are now minimal because of the type of software solution his company supplies.

“There is currently no comparable off-the-shelf solution to Marketplacer — omnichannel and e-commerce [offerings] do not address the holistic customer journey. Our technology is built for any product, anywhere in the world,” Wyatt says.

“We provide another channel for retailers to reach national and international buyers at very little cost or effort.”

The growth of online marketplaces is another sign the online retail environment won’t stop evolving anytime soon. Retailers who don’t provide a seamless customer experience across all channels will be abandoned by customers for those that do.

In a Bain Insights article about how retailers can manage cross-channel integration in order to become better omni-channel retailers, the authors spell out what’s at stake for retailers:

“The radical change sweeping across the retailing world brings with it tremendous opportunities for growth and profits—but only for companies that are willing to reimagine organizations that are fit for the future.”

As evidenced by the NAB online retail index and other figures, online retail is only going to keep growing as it enters into a new phase powered by nimble, niche retailers.

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