Podcasts
1st December 2010
Episode 5 - Episode 5 - e-Commerce Trends
Hi and welcome to this edition of The Business Plan, brought to you by LeasePlan. I’m Jackie Allender. In this week’s podcast, we’re looking at what’s happening in e-commerce.
And to be clear about what’s meant by e-commerce, the OECD defines it as the purchase of goods or services over the internet – where at least the ordering component is conducted online but where the payment and delivery could be on or offline. The transaction can be between businesses or organisations – known as B2B – or between a business and a household or individual – that’s B2C.
The number of Australian businesses and households connected to the internet is still growing dramatically. By June last year, we had an estimated 8.4 million active internet subscribers, and of those, almost 1.4 million were businesses or government organisations, according to the Australian Bureau of Statistics. And in the four years to 2007-08 the Bureau says businesses with broadband access increased by 50 percentage points to 81 per cent.
Yet Australia still lags behind the US and Europe in its use of e-commerce – particularly e-commerce retail – the B2C part of online sales. The ABS estimates that by 2007-08 around 43 per cent of Australian businesses were placing orders via the internet and nearly 24 per cent were receiving orders via the internet. Most of that is likely to be business to business traffic, rather than B2C.
Overseas, it’s reported that despite the financial crisis, e-commerce sales have continued to grow. In the US, during November and December last year, online retail sales dollars were up by 5 per cent. To get things in perspective, online retail is a $130 billion a year business in the US.
But over the past year, a number of reports have suggested that Australia is moving to catch up with developments in the US and European markets, both in the B2C and B2B categories.
What’s changing is that we’re now getting a population who are more comfortable with shopping online; Generation Y has grown up with the Internet. It’s now routine for shoppers to compare prices and features of products online, before they buy. And that translates into more useful economies of scale, which is what makes e-commerce worthwhile for retailers.
We’re also starting to see more well-known retailers step into the online space. Not all are selling online, some are just putting prices online, but businesses such as Officeworks have realised that they shouldn’t be ceding ground to specialised online stores. Having big stores online bring more potential customers online, as they feel more secure transacting with a known brand.
The other thing that’s changing is broadband speed. Slow broadband impedes e-commerce take up. Now the ABS reports that businesses are moving to faster internet speeds as that becomes available.
So, what are the trends in e-commerce?
Well, both here and overseas, more and more ‘bricks and mortar’ retailers are realising that they need to have what’s called a multi-channel approach. That is, reaching customers through both online and physical sites. There’s a compelling reason, too. Research by eMarketer shows that for every one dollar in online sales, the internet influenced 3.45 dollars of in-store sales. Online channels have a multiplier effect on sales.
Two other trends are worth mentioning. Firstly, the increasing expertise to support online retail – technologies to provide a good shopping experience, marketers who understand the need to integrate online and offline marketing strategies, and more sophisticated options for fulfilment – that is for actually getting the product ordered online to the consumer.
The second trend is the rise of the smartphone, such as the iPhone. With bigger screens and internet access, smartphones are ideal vehicles for what’s termed ‘mobile marketing’. It’s tipped that marketers will increasingly use smartphone applications to drive e-commerce sales.
As for business to business e-commerce, it’s also continuing to grow in Australia, as companies realise the benefits in terms of flexibility and efficiency.
Dr Samir Gupta is a senior lecturer in Marketing at Monash University, where he specialises in e-business. He’s tracked the change in e-commerc e from the old Electronic Data Interchange (EDI) systems that companies installed in the 1980s to today, where the web has taken over.
He says e-commerce is now pushing down from large and medium enterprises to smaller ones and that online B2B activities have now reached a ‘critical mass’. Dr Gupta says organisations are finding B2B e-commerce is perfect for sourcing inputs – from stationery to product components. It’s also opening up new supply sources from around the world, and giving companies the ability to research new products and to switch suppliers easily and quickly. As well, it’s driving efficiencies; for example, fewer sales visits might be needed to customers, saving fuel – and staff costs.
Trends in the B2B area are harder to discern. A recent blog post from Infinity Technologies suggests that evolving B2B sites will enable greater customisation of their product offering, depending on the customer’s location, contract of purchase history; and that there will be greater emphasis on rich content – providing very detailed product specifications, for example, that are not necessary on B2C sites. As well, enabling business customers to self serve not only in purchase but in returns and queries as well, will be integrated into the B2B experience.
Well, I hope you’ve enjoyed this edition of The Business Plan. Don’t forget, you can find a transcript of this podcast on the LeasePlan website at leaseplan dot com dot au. Follow the links to the media section, which will lead you to ‘The Business Plan’. We’d also love to have your comments on the topic, the website also has a section for comments. Next week, we’re looking at the importance of change management in e-business solutions. I’m Jackie Allender, thank you for listening.
LINKS RELATED TO THIS STORY
Internet statistics for Australia (ABS)
http://www.abs.gov.au/ausstats/abs@.nsf/web+pages/statistics?opendocument#from-banner=LN
Internet commerce (ABS) http://abs.gov.au/Ausstats/abs@.nsf/Latestproducts/A1E93DF2540C4FBCCA257617001908B7?opendocument
World e-commerce statistics
http://www.akamai.com/html/technology/nui/retail/index.html
E-commerce trends (US)
http://ffpglobalblog.wordpress.com/2009/10/28/ecommerce-trends-for-2010/
http://www.readwriteweb.com/archives/e-commerce_top_internet_trends_of_2000-2009.php
E-commerce retail in Australia (blog)
http://www.infinitytechnologies.com.au/blog/2009/12/02/is-online-retail-about-to-explode-in-australia/
http://www.getprice.com.au/5-things-holding-back-online-retail-in-australia.htm
http://www.infinitytechnologies.com.au/blog/2009/12/14/key-trends-in-b2b-ecommerce
E-commerce retail in Australia: video
http://www.youtube.com/watch?v=x6SYLMi4Ghc&feature=player_embedded#at=158
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