The National Australia Bank (NAB) has released its official sales report for the online retail sector, and there are signs of bad times.

Online retail has taken a dive: NAB report

The National Australia Bank (NAB) has released its official sales report for the online retail sector, and there are signs of bad times.
NAB chief economist Alan Oster said the report has a ‘very weak’ forecast for retailers.
The NAB’s cashless retail sales index is highly regarded as one of the more accurate reports when it comes to predicting the results of the Australian Bureau of Statistics (ABS) own findings on the nation’s economy.
Because it processes about 2 million cashless transactions per day, NAB has a wealth of data that allows it to report on retail spending behaviour to forecast sales trends. But if its newest report is right, a majority of those transactions are not going into retail sales.
The following months are also looking bleak, with Mr Oster further saying that “ABS retail trade will fall 0.5% a month-on-month basis, the weakest forecast in our series going back some half a decade”.
Retail leasing specialist Phillip Chapman, director of Lease1, commented: “Another weak result such as this is the last thing the retail sector needs, with a decade of record low inflation and margin compression, the industry needs to desperately find a savings in occupancy costs.”

The report

NAB is certain that there are a number of issues (both locally and abroad) that could be behind this downward trend. Among these included are costs in the housing market, low income growth among consumers, as well as competition from e-commerce (which NAB had reported on more positively in its March sales index for online retail). The NAB Online Retail Sales Index contracted -3.8% in April on a month-on-month (mom), seasonally adjusted (sa) basis. This follows an upwardly revised March result (+2.4%, was +1.7% mom, sa). While not of the same magnitude, the April result is consistent with the broader retail sales weakness it has identified in its Cashless Retail ABS forecast for April (-0.5%).
After a strong March, all eight online retail categories recorded a contraction in month-on-month sales growth, with the largest sales category, Homewares and appliances (-6.9% mom, sa), the second weakest in the month behind takeaway food (-8.6%). In year-on-year terms, five of the eight NAB Online Retail Sales Index categories were lower compared to April 2018. Department and variety stores remains the fastest growing category in year-on-year terms (26.1% y/y). Games and toys performed best, albeit contracting, in month-on-month terms (-0.2% mom, sa).
In month-on-month terms, all states and territories recorded a contraction in growth, led by Tasmania (-6.4%). The two largest online sales states, NSW (+0.5% yoy, sa) and Victoria (+1.6%), recorded considerably weak year-on-year growth in April.
At +0.7%, international online retailers performed better in month-on-month terms relative to domestic competitors (-4.4% mom, sa). However, in year-on-year terms, from the series, considerable weakness in international online sales remains.
The NAB estimates that in the 12 months to April, Australians spent $28.98 billion on online retail, a level that is close to around 9% of the traditional bricks and mortar retail sector (March 2019, Australian Bureau of Statistics), and about 17% higher than the 12 months to April 2018.

NAB chief economist Alan Oster commented:

“Our NAB Online retail sales index data indicates considerable weakness in online retail sales for April 2019. Online retail sales tend to be more volatile than broader retail, experiencing far greater monthly fluctuations. This month, both online retail and broader cashless retail series indicated very weak retail conditions. While year-on-year growth in online sales has also slowed considerably in recent months, these comparisons are made to a period of elevated sales in 2018, with major new merchants to Australia, and also pre-GST exemption effects.
“By category, department stores continued to lead year-on-year growth. In the month, all categories experienced a contraction in sales, with a drop in sales for Games and Toys the most mild. In month-on-month terms, Takeaway food (-8.6% mom, sa) was the worst performer. This result may indicate structural change in this sector given recent high profile exits and consolidation. The largest spending share category, homewares and appliances, recorded the second worst growth rate in the month, and also contracted in year-on-year terms. The Cashless retail indicator also pointed to weakness in this key retail sector in April. While department stores continue to record the strongest growth, this category has slowed from high double digits post the introduction of the GST on all goods in July 2018.
“Tasmania, with about 2% of online retail sales, was weakest in April, after leading growth in March. New South Wales, Victoria and Queensland represent over three quarters of the online market in Australia by sales value. Of these larger sales states, Queensland was strongest over the year.
“By merchant location, domestic online retailers continue to outpace their offshore counterparts, with international slowing in year-on-year terms. However, domestic retail sales contracted in the month, while their international counterparts recorded mild growth.
“It is worth noting here that our definition of a domestic online retailer can include those merchants whose parent organisation might be overseas with an Australian Subsidiary. Using GST as a key defining characteristic of domestic and international is no longer appropriate given changes made in July 2018,” Mr Oster said.

Banking may save Australia Post

Australia Post and the Commonwealth Bank of Australia (CBA) have signed an agreement to support critical investment in Australia Post’s Bank@Post service. This is a landmark agreement in the history of Australia Post and will help ensure all Australians can continue to use Post Offices across the nation to access important financial services.
The five-year commitment includes CBA contributing a new annual Community Representation Fee of $22 million and revised transaction fees. This partnership enables Australia Post to invest in the Post Office network in order to help provide safe, reliable banking services, ensure our Licensed Post Office partners will be paid appropriately and support the future prosperity of many communities.
Australia Post’s group chief executive officer and managing director Christine Holgate said: “I am extremely appreciative that the nation’s largest bank has taken a lead position in supporting Australia Post. This investment will not only help save a critical service in Post Offices serving the communities of Australia, it saves jobs and supports the financial viability of our local Post Office partners.
“The agreement ensures customers will be able to access withdrawal, deposit, balance enquiries and passbook services at more than 3500 Post Offices across the country. Approximately 30,000 CBA customers use Bank@Post every day.”
There are 1,550 communities across Australia, predominantly in rural and regional Australia, who today have no bank branch. The citizens and small businesses of these communities depend on Australia Post to provide access to financial services through the Bank@Post service in their local Post Office. These outlets are also essential for the ‘last-mile’ delivery of the booming online retail sector.
Without this service these communities face significant economic and social challenges. Recent research by Deloitte Access Economics highlighted the important role Post Offices play in local communities. In fact, with every role Australia Post employs in rural and regional Australia, two more jobs are created in the economy.
Today Australia Post loses money operating the service and does not have the funds to subsidise this service further or make the critical investment needed. Many of Australia Post’s local Post Offices are operated by Licensed Post Office partners, who as small businesses, do not have the capital investment needed.
Without support, Australia Post risked either suspending the service or closing some community Post Offices, which would have hurt communities and cost jobs.

Gen Z wants perfect CX and wants it now

Online shipping technology company Neopost Shipping has published a survey report that highlights the need for shipping to contribute to ‘customer experience’ (CX), with 98% of young consumers abandoning their carts online due to shipping-related friction.
The report Great Expectations: Shipping, CX & Gen Z underlines the influence that shipping has on e-commerce conversion and retention. It features survey data from retailers and online consumers in four countries: United States, United Kingdom, France and Australia.
“Gen Z is changing the e-commerce playbook by challenging retailers to elevate the customer experience. Shipping is a key element of online shopping, so retailers who are adept at working through its complexity to leverage it as a revenue-driving CX tool will reap great returns,” said senior vice president Americas at Neopost Shipping Matthew Mullen.
Key findings of the report include:

  • Cart abandonment strongly influenced by the lack of shipping options: 98% of Gen Z consumers have stated that they will abandon cart if a preferred shipping option is unavailable to them at checkout, with 44% opting to then buy from a competing online brand, 33% attempting to visit the brick and mortar store of the same brand, and 21% planning to visit a mall to buy the items.
  • Retailers are not keeping up with Gen Z shipping demands: Compared to the previous year, Gen Z’s willingness to pay for new types of shipping services such as hyperlocal (1-3 hours), same-day and weekend or after-hours delivery has increased. Additionally, Gen Z’s demand for these consumer-centric shipping services is significantly higher compared to the average consumer, yet only up to a fifth of retailers offer them.
  • Strong appetite by Gen Z for speed-based delivery services: Gen Z is more committed compared to the average consumer to shop online if retailers can have their orders shipped faster. 71% of Gen Z versus 56% of average consumers will increase their basket size to meet the spend threshold for free hyperlocal delivery (1-3 hours), while 44% of Gen Z versus 25% of average consumers will shop more online if next-day delivery was available.

“Gen Z is instant gratification personified,” said Mr Mullen, “In a market where the likes of Amazon are pushing the boundaries on what a great shipping experience looks like, retailers rarely get a second chance with young and savvy consumers who won’t think twice about abandoning brands that cannot provide the shipping choice and convenience they desire.
“It’s a known fact that shipping and fulfillment can be operationally challenging for many retailers. Instead of taking on the burden of building everything from the ground up, (retailers should) leverage the supply chain innovations that are in the market – such as updating your technology stack with a shipping software platform, trialling smart parcel lockers, and accelerating the process of getting online orders out the door with automated packing machines,” Mullen said.
The Great Expectations report includes new insights on how shipping can motivate or detract Gen Z from online shopping, why shipping can drive Gen Z to abandon cart and buy from a competing retailer, what retailers can do to convert and retain Gen Z through shipping, and how marketplaces like Amazon are winning Gen Z over with their approach to shipping.

More than half in under two hours by 2028

Zebra Technologies Corporation has revealed the results of the Asia-Pacific edition of its Future of Fulfilment Vision Study, a body of research analysing how manufacturers, transport and logistics (T&L) firms and retailers are preparing to meet the growing needs of the on-demand economy.
Manufacturing and T&L global director at Zebra Technologies Jim Hilton said: “Driven by the always-connected, tech-savvy shopper, retailers, manufacturers and logistics companies are collaborating and swapping roles in uncharted ways to meet shoppers’ omnichannel product fulfillment and delivery expectations. Zebra’s Future of Fulfillment Vision Study found that 95 per cent of survey respondents in Asia-Pacific agreed that e-commerce is driving the need for faster delivery. In response, companies are turning to digital technology and analytics to bring heightened automation, merchandise visibility and business intelligence to the supply chain to compete in the on-demand consumer economy.”
Key survey findings

  • 67 per cent of logistics companies expect to provide same-day delivery by 2023 and 55 per cent anticipate delivery within a two-hour window by 2028. In addition, 96 per cent of survey respondents expect to use crowdsourced delivery or a network of drivers that choose to complete a specific order by 2028.
  • 92 per cent of the respondents cited capital investment and operating costs of implementing an omnichannel operation as a key challenge. Only 42 per cent of supply chain respondents reported operating at an omnichannel level today. In contrast, an estimated 73 per cent of consumers shop across multiple channels.
  • Seven in ten surveyed executives agree that more retailers will continue to turn stores into fulfilment centres that accommodate product returns. By 2023, 99 per cent of retailers plan to implement buy online/pick up in store to allow a more seamless fulfilment process.
  • In APAC, 93 per cent of respondents agreed that accepting and managing product returns remain a challenge. Reverse logistics remain underdeveloped and significant opportunities for improvement remain. Today, 58 per cent of retail respondents add a surcharge for returns, and 71 per cent have no plans to change this in the future. Meanwhile, 71 per cent of survey respondents agree that more retailers will turn stores into fulfilment centres that can accommodate product returns.
  • Today, 55 per cent of organisations are still using inefficient, manual pen-and-paper based processes to enable omnichannel logistics. By 2021, handheld mobile computers with barcode scanners will be used by 99 per cent of respondents for omnichannel logistics. The upgrade from manual pen-and-paper spreadsheets to handheld computers with barcode scanners or tablets will improve omnichannel logistics by providing more real-time access to warehouse management systems.
  • Radio-frequency identification (RFID) technology and inventory management platforms are expected to grow from 32 per cent today to 95 per cent in 2028. RFID-enabled software, hardware and tagging solutions, offer up-to-the-minute, item-level inventory lookup, heightening inventory accuracy and shopper satisfaction while reducing out of stocks, overstocks and replenishment errors.
  • Future-oriented decision makers revealed that next generation supply chains will reflect connected, business-intelligence and automated solutions that will add newfound speed, precision and cost effectiveness to transport and labour. Surveyed executives expect the most disruptive technologies to be drones, driverless/autonomous vehicles, wearable and mobile technology, and robotics.

In association with the launching of the report, Zebra introduced a new mobile printer and RFID tool that will help drive better efficiencies both on and off-premise. Zebra says the new ZQ300 Series mobile printers empower workers in the field, in the warehouse or on the retail floor with on-demand printing capabilities. Meanwhile, the FX9600 fixed UHF RFID readers will enable enterprises to keep up with high volumes of cargo movements in the warehouse or dock doors.
 
 

Online retail powers on

Proportion of online shoppers by Technology Adoption Segments*

Source: Roy Morgan Single Source (Australia), April – March 2018 (n = 50,014). *NB: Overall population breakdown of Technology Adoption Segments are as follows: Technology Early Adopters: 19.4%; Professional Technology Mainstream: 16.1%; Digital Life: 17.0%; Older Tech Explorers: 9.0%; Technology Traditionalists: 23.2%; Technophobes: 15.3% Base: Australians 14+ buying on the internet in last 4 weeks, n = 5,787.

New research from Roy Morgan shows that over the year to March 2018, 9.46 million Australians 14+ (46.8%) purchased something online in an average four week period, an increase of 590,000 in just 12 months. It also represents an increase of 2.3 million since 2014.
The Roy Morgan Single Source survey of over 50,000 consumers was conducted in the 12 months ended March 2018, including over 5,000 online shoppers.
What Australians are buying online
Entertainment and Leisure items account for the greatest number of internet shoppers, with 4.5 million people buying something from this category in any given four weeks, followed by Fashion (2.7 million), Food and Beverages (2.4 million) and Reading Material (2.2 million).
Online shopping has risen for every product category in the chart except for Furniture. Between 2017 and 2018, Fashion Shoppers (2.7m) and Health and Beauty products (1.4m) both increased sales by 21.1% over the year, with Entertainment and Leisure up by 11.1%.
Online shopping still more the domain of the tech savvy but is becoming mainstream
While online shopping is gaining ever-increasing momentum with Australian consumers from all walks of life, those most likely to make purchases this way still tend to be from the more technologically savvy end of the spectrum. Indeed, viewing these consumers through the lens of Roy Morgan’s Technology Adoption Segments reveals that nearly half of all online shoppers (49.1%) fall under the umbrella of either Technology Early Adopters or Professional Technology Mainstream, the two most digitally inclined segments of the population.
As their name suggests, Technology Early Adopters are always the first to purchase and use new technologies, and tend to be well educated and high-earning. Whereas they comprise 19.4% of the overall Australian population, they account for 28.9% of all people who buy something online in an average four weeks.
Similarly, the ambitious, early-adopting Professional Technology Mainstream comprise just 16.1% of the population but 20.2% of all online shoppers. Meanwhile, the less switched-on Technology Traditionalists and Technophobes are under-represented among Australia’s online shoppers.

Online shopping product categories purchased in average four weeks Source: Roy Morgan Single Source (Australia) 12 months ended March 2018, n = 50,014.

Overall population breakdown of Technology Adoption Segments are as follows: Technology Early Adopters: 19.4%; Professional Technology Mainstream: 16.1%; Digital Life: 17.0%; Older Tech Explorers: 9.0%; Technology Traditionalists: 23.2%; Technophobes: 15.3% Base: Australians 14+ buying on the internet in last 4 weeks, n = 5,787
 
CEO of Roy Morgan Michele Levine said: “The data is unequivocal, Australians can’t get enough of shopping online.
“In any given four-week period, more and more of us are purchasing products as diverse as entertainment, clothing, food, reading matter, health and beauty products, furniture, and electronics via the internet. With nearly 9.5 million Australians or 46.8% purchasing online in an average four week period and the rapid growth over recent years, this is a retail revolution.
“This rapid growth represents a major opportunity for the growth of Amazon when it develops its full product offering. Australian bricks and mortar retailers are under considerable pressure from overseas and local online retailers.
“Understanding the technology-specific attitudes and behaviours characterising each Technology Adoption Segment is a great way for online retailers to target their best prospects, approach their marketing decisions more strategically and ensure they’re ready for the challengers ahead, particularly from Amazon.”

Are you giving your customers what they want?

A recent Mitel Global Benchmark Study has found a significant gap between customer expectations and reality:

  • Nearly two-thirds (60%) of respondents in Australia say more work is needed by companies to improve their online experience.
  • Customer experience (CX) ratings vary by vertical with hospitality leading the way globally.
  • More than half of all respondents think machine-to-people interactions will improve CX.
  • Australian consumers still believe they will have the better customer experience in a physical location than an online store.

The survey, of 5,000 adults from Australia, the United States, UK, France and Germany, indicates a measurable disconnection between the advancements organisations think they are making to deliver exceptional customer service and how customers actually view their commercial interactions. Specifically, less than half of respondents believe the technology needed to deliver the perfect online buying experience is available. This stands in stark contrast to findings of a previous Mitel survey, in which 90 per cent of IT decision-makers optimistically reported progress in improving customer service through the use of technology.
Whilst a clear sign of the growing pains associated with digital transformation initiatives underway globally, the new survey also uncovers an opportunity for technology to play a key role in defining and keeping pace with changing buyer behaviour and preferences. In fact, over half of those surveyed believe machine-to-people interactions will positively transform the customer experience (51% in Australia).
Vertical visionaries, leaders and followers
As customer experience becomes increasingly critical for businesses to remain relevant and compete, Mitel’s survey shows differences in customer satisfaction across vertical industries. Growing use of cloud communications and applications, combined with emerging technologies like the Internet of Things (IoT), artificial intelligence, chatbots, and natural language processing (NLP), are creating new ways for companies to nurture and build customer relationships. Winning companies will be those that are able to differentiate their brands by delivering seamless experiences across physical and digital environments, devices and channels. Currently, some segments are doing better than others.

  • Hospitality leads the charge: Hospitality management knows the first stop on the itinerary for today’s travellers are online review sites. Before booking a trip, consumers want to hear what others have to say. In fact, it’s a near-universal activity. Given the impact reviews can have on average daily room rates, it’s no surprise this industry takes customer satisfaction seriously, receiving top marks among those surveyed. Australians also responded with high satisfaction rates (41%) with regards to their online experience with hospitality providers.
  • Physical retail isn’t dead, but the customer experience is: More than 60 percent of shopping done by respondents still takes place in a physical store, though that number is shifting. When asked about the challenges faced by today’s brick-and-mortar retail outlets, three out of five respondents say the fact retail stores are struggling has more to do with the customer experience they provide, not products. While Australians are currently shopping in physical stores at much higher levels (74%) they agree with their global counterparts that customer service just doesn’t exist anymore. A seamless omnichannel approach is critical for this market, where more than one-third (36%) of Australian respondents note they make purchasing decisions based on the experiences brands provide versus the products and services offered. Chatbots can be used to manage simple tasks, while IoT and team collaboration tools open up new avenues for communications across media, whether it’s voice, email, SMS, web chat, social media or a website.
  • Speed is the game in sports and entertainment: In the fast-paced world of sports and entertainment, immediate and clear communication is a necessity. Forty-nine percent of Australian respondents point to simplicity and speed as the most important factor in a good customer service experience, slightly higher than the global average (45%).
  • Availability vital in healthcare: Healthcare organisations receive the lowest marks from respondents in all countries when it comes to customer service. Australian respondents, in particular, say availability and 24/7 service (40%) is the most important feature they look for from healthcare services, followed by simplicity and speed (36%).

“The data shows no matter where you are in the world, customer service matters — bottom line,” said survey administrator Regina Corso of Regina Corso Consulting. “In order to truly connect with customers on their own terms, organisations must look for new ways to balance technology investments with personalised customer service. Those that are able to navigate this balance will go on to build strong brand loyalty with their customers, helping them succeed in today’s highly competitive purchasing environment.”
Additional insights from the data indicate:

  • Bots, AI and machines can fill the customer service gap: Consumers appear to be increasingly comfortable with machine-to-people interactions when shopping online, with over 78 percent of Australian respondents saying they are satisfied dealing with automated processes. Most do not want to interact with a person while shopping online unless the service is very complicated, or they are having trouble finding the product or service they need. Half of Australian consumers and over 60 percent of U.S. respondents say if they could shop without speaking to a person, it would be a good thing. Even so, physical retailers need to balance the use of technology. Consumers do expect people to efficiently help them when shopping in a physical storefront.
  • Mobile reigns supreme in the United States; Australia favours in-store: Of all respondents, U.S. and Australian consumers shop most frequently during a typical week. There are also notable differences by country regarding how and where consumers shop. U.S. respondents reach for their smartphone and use apps; Britons like shopping online via their tablets; French shoppers most often use their laptops; Germans are more likely to use a desktop computer; and Australians prefer a physical store location (74%).
  • In Australia, brands can’t be complacent about improving their online presence. While more Australians still prefer buying goods and services in physical stores, more than two in five (42%) say they want to shop even more online, and just one in ten Australians (9%) say they don’t like shopping online at all. Seven in ten Australians (71%) say overall, shopping online is more convenient than shopping in a store. To meet this growing demand for online services, and the change taking place in consumer behaviours and expectations, brands need to consider a greater level of consistency across both the online and physical experience for their customers.

The study is the latest in its Business Insights Survey Series, which builds on previous research from August 2017 where more than 75 per cent of IT decision-makers said they planned to tie together devices, emerging technologies, and communications and collaboration capabilities within two years to enable machine-to-people interactions to improve customer experience. This body of work expands on the concept established by Mitel in 2016 of Giving Machines a Voice to enable IoT and other machine triggers to launch real-time communications workflows that can improve how companies work and collaborate. Exploring a different angle, this survey examines how consumers view customer experience in shopping for goods and services across market segments, including retail, hospitality, sports and entertainment, health care, financial services and utilities.
For more results and a closer look at regional or country-specific data, download the white paper.

eLogistics needs more space

eStore Logistics, said to be Australia’s largest e-commerce distribution company, has made a significant move to boost its services to retailers by committing to a 12,515m2 warehouse at Marsden Park, NSW with LOGOS Property.
This new facility will complement its current Australian footprint, which is in excess of 50,000m2, and significantly increase eStore Logistics’ order servicing capabilities to serve more clients. Its current clients include Kogan.com, Temple and Webster, Hairhouse Warehouse, Patagonia, Dick Smith and Essendon Football Club.
“This expansion highlights our rapid growth, driven by our proprietary IT and omni-channel fulfilment service and solutions,” said managing director of eStore Logistics Leigh Williams.
“Our new facility in Marsden Park will feature world-leading logistics systems that support robust e-commerce fulfilment processes. We have complex algorithms that minimise manual handling and human decision making while maximising accuracy. We’re excited to be expanding our business and making our services available to more online retailers and enabling them to get orders to their customers super-fast at low cost”, added Mr Williams.
Extensive time was spent in the design phase to optimise the operational layout.
“We worked with eStore Logistics to design a facility that maximised storage density, but also allowed for approximately 30 per cent of the warehouse footprint to be allocated for product staging and returns. It is pivotal that sufficient footprint is designated to product staging and returns, as it is an inherent challenge in the e-commerce landscape,” said director of TM Insight Travis Erridge.
“Despite the allowance for a significant percentage of floor area being allocated to product staging and returns, the design enabled eStore Logistics to achieve 1.5 pallets per 1 m2 of floor area, well above the ratio that most 3PL adopt in their operations,” he added.
With local online retail sales accounting for 7.5% of total retail spending, there is still enormous upside yet to come from the e-commerce sector in Australia.  When compared to China (21%) and the UK (19%), most experts are expecting the local e-commerce sector to more than double in the next few years, creating a huge opportunity for businesses like eStore Logistics to further leverage their platform.
The facility will be operational in November 2018 and will have an end value of approximately $25 million.

Not at work: 29% of employers don't allow deliveries to work

New research indicates that 50 per cent of employees get their online shopping delivered to their workplaces, despite 29 per cent of employers disapproving of this practice.
The results come from an independent survey of 1013 Australian adults, commissioned by parcel delivery service CouriersPlease (CP), which delivered nearly 18 million parcels Australia-wide and internationally in 2017 alone.

  • 37% of employees get their online shopping delivered to work at least 1-2 times a month.
  • An additional 13% receive their parcels at work at least 3 times a month.
  • 62% of those in their 30s receive their parcels at work – more than any other age group.

The survey reveals that 37 per cent of employees receive their shopping at work 1-2 times a month, and 13 per cent admitted it was at least three times a month. Employees in their 30s receive their online shopping at work more than any other age group: two-thirds (62%) admitted they have at least 1-2 parcels delivered at work every month. Employees over 60 may prefer to shop in-store, with 68 per cent saying they receive no personal shopping parcels at work.
Despite the prevalence of the practice, 29 per cent of employees admitted that their employers do not allow personal parcel deliveries at work. Nearly all (90%) employees understood their employer’s policies.
When asked if their employer policy on shopping deliveries was to be enforced, 57 per cent of employees said they would opt to have the parcel delivered at home without a signature, 56 per cent would collect from a post office or depot, 23 per cent would organise a parcel locker and 21 per cent a parcel collection shop (such as a newsagent, petrol station or convenience store) as their delivery preference.
CEO of CP Mark McGinley said: “With the latest statistics showing Australians spent $24 billion online in the 12 months to November 2017, and with online retail sales increasing by 4.7 per cent in November last year – the highest monthly growth rate since 2014 – it’s clear that online shopping is a fact of life for the majority of Australians. While most workplaces recognise this, there are still numerous workplaces that need to adapt to the pervasiveness of online shopping in Australia.
“The retail industry is reliant on smooth parcel delivery options to continue accommodating growing customer demand for online goods. Further research conducted by CP last year reveals four in five (82%) online retailers think that offering more flexible parcel delivery or pick-up options to online customers encourages them to purchase more online.”
 
 

Amazon’s Australian launch imminent

Business information researcher IBISWorld says rumours of Amazon’s imminent Australian launch are mounting, with the company releasing an email to its third-party sellers asking them to be prepared by 2.00 pm Thursday 23 November for a soft launch of Amazon Marketplace. This move supports speculation that the company will start trading on Black Friday or Cyber Monday to take advantage of increased Christmas spending, with local retailers on high alert as a result.
“Amazon’s imminent arrival into the Australian market is set to shake up the retail sector,” explained Ms Kim Do, senior industry analyst for IBISWorld. “The company intends to challenge domestic retail prices by offering items for 30% less than domestic retailers. This is expected to appeal to price-conscious Australian consumers, and is likely to affect local retailers that have found it difficult to adjust to a shift in consumer spending behaviour over the past five years.”
With the entry of Amazon, the online shopping industry in Australia is expected to grow at an annualised 13.5% over the five years to 2017-18, to reach $20.1 billion. Although Amazon has largely kept its plans for the Australian market under wraps, IBISWorld expects Amazon will be prepared to make initial losses to help it gain market share within Australia’s online retail sector as quickly as possible.
“The company is expected to focus on providing consumers with low prices, a diverse product range and fast delivery,” explained Ms Do. “However, to be successful in Australia, Amazon’s current business model will need to be adapted to the Australian market. For example, Australia’s large geographical size and dispersed population will lead to higher distribution costs compared with Amazon’s home market in the United States. This is likely to limit the company’s ability to offer Amazon Prime Shipping services in the short to medium term.”
IBISWorld believes department stores and electronic goods retailers are expected to be the hardest hit by Amazon’s arrival. IBISWorld’s data shows department stores are already struggling to attract consumer demand, with industry revenue expected to decline by an annualised 0.9% over the five years through 2017-18.
“Technology products are anticipated to be the highest selling category for Amazon, which will disrupt the electronic goods industry. Australian consumers are particularly price savvy when it comes to electronic goods, and will often compare prices across multiple retailers to find the best value. As a result, Amazon is expected to take market share away from local electronic goods retailers such as JB Hi-Fi and Harvey Norman,” said Ms Do.
Whilst Amazon will no doubt disrupt the Australian retail sector, IBISWorld believes its entry will also bring some positive changes to Australia’s e-commerce landscape, including increasing the uptake of online shopping.
Currently, Australian online sales are expected to account for an estimated 7.4% of total retail spending, although this figure is projected to reach 15.0% by 2022-23. Amazon’s arrival can also be seen as an opportunity for existing Australian retailers, with the online retailing giant expected to help drive innovation relating to digital transformation, logistics optimisation and multichannel platforms. Amazon will also provide some retailers with another platform to sell their goods.
 

Outdoor group accelerates omnichannel expansion

Fenix Outdoor Group, a subsidiary of Switzerland-based outdoor goods specialist Fenix Outdoor International AG, has boosted its international, omnichannel growth strategy. Fenix Outdoor Group will standardise its order fulfilment on the Manhattan SCALE system with initial deployments in its distributions centres in the US and Germany, followed by the Netherlands, Norway, China and Australia.
Fenix Outdoor Group develops and markets high-quality, low-weight equipment and clothing for outdoor activities under its Fjällräven, Tierra, Primus, Hanwag and Brunton brands, and sells through a combination of its own stores, retail partner stores and a growing online operation. The company’s major markets include North America, Germany and the Nordics as well as Australia.
Established in the 1950s, Fenix Outdoor has grown organically and through a series of acquisitions. Its 2015 purchase of Globetrotter, a German retail group, transformed the company from a predominantly wholesale-oriented business to a multi-channel commerce operator. The multiple, disparate systems it had inherited over the years were, however, hindering its further development. Fenix Outdoor therefore opted for a new warehouse and distribution management system to optimise its expanded business operation and to support its broader international and omnichannel growth ambitions.
Global supply chain director at Fenix Outdoor Group Marcel Gerrits commented: “With today’s consumers requiring exceptional shopping service, we are building our capabilities to provide a ‘best in class’ omnichannel one – offering our customers the goods they want, whenever and wherever they want them. We selected Manhattan as our chosen partner and its SCALE system that allows us to serve multiple channels from a single inventory pool. It also has on-the-ground support teams in all the geographies where we will deploy.”
 

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