The Australian retail industry is experiencing the biggest disruption since e-commerce first appeared on the scene.
While this can largely be attributed to Amazon’s arrival in Australia, the online retail giant isn’t the single factor unsettling Aussie retailers.
With Aussie retail undergoing a tremendous amount of change, here are five top trends retailers should be keeping a close eye on.
1. Amazon arrives in Australia
Amazon launched its site in Australia in December 2017 and introduced Amazon Prime in June of this year, attracting a lot of negative press, with some even calling it a failure.
Admittedly, the online retailer is yet to make a significant dent in the local market, but it is not to be mocked. As its roll-out in other markets has shown, Amazon embeds itself in a market and slowly starts to chip away at the edges of its competitors, rarely entering a new region with a “big bang”.
In Australia, Amazon appears to be right on target and certainly on the road to disrupting many retailers in the not-too-distant future. In the meantime, Amazon’s local influence is clear in events such as Coles announcing a premium loyalty club, which includes, among other things, access to online video streaming!
2. The rise of sale events
Everybody’s favourite day of the year just turned into a fortnightly expectation. Whereas sale days used to be a much-anticipated biannual event, they are now a common occurrence—Prime Day, Afterpay Day, Click Frenzy, Cyber Monday, the list goes on.
If retailers want to make a profit outside of these days, they need to constantly deliver low or discounted prices. If not, consumers will likely wait until the next sale day to make their purchase.
While this pricing demand can be a challenge, it also means that buying behaviours plateau with frequent yet manageable surges, instead of spiking twice or so a year, creating chaos when trying to cater for all the sudden demand.
Just remember: if you’re going to have a sale day, make sure you can fulfil orders and deliver on-time! Consumer complaints in the retail industry spike in the weeks following sale events.
3. Online marketplaces explode
Marketplaces are certainly on the rise; however, they may not be such a big threat to us … yet. Australians are typically conservative consumers and getting us to commit to that online purchase can be difficult.
We know that consumers appreciate personalisation and respond well to highly targeted suggestions and with many marketplaces attempting to be all-encompassing, perhaps they just aren’t “warm” enough.
The ones that have succeeded target a certain type of problem, such as Etsy or closer to home, Bike Exchange. Others like Vinomofo and Uber Eats have powerful venture capital backing, often including well-oiled marketing machines.
Despite it being very early days for the marketplace model, Aussie retailers need to be ready to compete.
4. Facebook and Instagram drive sales
Social commerce, or the buying and selling on or through social platforms such as Facebook and Instagram, is one of the most notable trends that has emerged over the last few years. With 79 per cent of Australian consumers using social media, it’s no surprise that this has taken off.
In addition to this, the use of social media influencers is allowing brands to connect with their consumers in the right place, at the right time, using a voice that they know and trust.
Social commerce can be seen as an extension on traditional marketing and it’s crucial to businesses in the modern marketplace. It uses all the theories we know and love, like how important it is to put your brand in front of the right audience, or the utility of testimonials and word of mouth.
On the flipside, retailers need to be prepared. If Kylie Jenner posts about your cosmetics brand, you better have that lipstick in stock!
5. Transactions head overseas
Aussie retailers are facing steep competition as global retailers tighten their grip on the local market. Amazon as mentioned is already poised in the market; Alibaba is another sleeping giant—and those are just two big names.
With increasingly competitive pricing, it is becoming the norm for consumers to decide on a product they like, but delay purchasing until they’ve searched abroad in case there’s a cheaper option. The impact here is twofold. While budget-conscious consumers may stray away from Australian-made products, global shoppers who are looking for high quality goods may find themselves on an Australian website.
For Aussie retailers, this may mean a few changes are necessary. First and foremost, have a user-friendly website that can be localised depending on the consumer’s location. Secondly, be transparent about how you fulfil international orders and in what timeframe.
The retail industry is changing, and Aussie retailers must alter their business model in a way that allows them to adapt to the latest trends. It isn’t necessary to rework the model entirely, rather, retailers should focus on nailing the basics. If you have the right framework in place—including processes, technology and your supply chain—your business is in a strong place to adjust to whatever trend pops up next—and there will be a new one.
Paul Soong is the regional director, ANZ at BluJay Solutions.
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