As Managing Director of NetSuite’s APAC business, Mark Troselj has a unique perspective on e-commerce. Here he shares his thoughts on multichannel strategy.
As Australian retailers head towards the busiest time of the year, the pressure on traditional retailers to compete with cheaper prices and greater variety available online provides both risk and opportunity. This continues to be heightened by the strong Australian dollar, which increases consumers’ purchasing power on overseas sites.
An estimated $6 billion of sales from Australia in 2011 were purchases on overseas websites, which equates to around 40 percent of overall online sales, according to Frost & Sullivan. It is becoming increasingly obvious that if many traditional retailers don’t start consolidating their physical store presence and migrating some sales to the online channel, they are both ignoring a very large opportunity and adding additional pressure to stores.
Surprisingly, Frost & Sullivan’s research also found that only around 50 percent of Australian retailers in 2011 offered online sales capabilities, with the proportion of sales via the Internet still fairly low. Many other retailers use their websites only for marketing and customer support. This just goes to show that many retailers are still missing out on market opportunities from the booming online retail sector in Australia.
The slow adoption of online retailing by the large department stores and large retail chains in Australia is a key reason for the lag in local e-commerce activity overall. This is showing signs of changing, however, as many are being forced to walk a new path. David Jones, for example, was one of the most high profile cases this year racing to catch up with online competition after reporting a 20 percent drop in earnings.
Despite a shift in focus this year however, a number of major retailers (including David Jones and Myer), have all experienced website crashes or temporary outages under the strain of high traffic volumes at one point or other, indicating that Australian retailers are still ill-equipped to handle the amount of demand that exists for online retail.
The lesson learned from all of this should be a wake up call to Australian retailers to take notice and get the right multi-channel strategy in place now, otherwise they will continue to lose out to overseas online sites.
Today’s consumers are more demanding than ever. When they interact with a retailer, they make few distinctions between brick-and-mortar stores, online or other channels. They want to shop whenever and however they please, through any channel—and they want a great experience every time.
The major challenge for retailers is the increasing range of digital channels that customers use to access the internet. This fragmentation creates a number of hurdles, particularly when it comes to implementing a common customer experience across all channels.
Ecommerce is not a stand-alone system: if you consider that customers want stock availability, discount tiers, payment options and specifications, yet you also need to offer these in real-time from the back end, along with invoicing, margins, analytics, etc.
What retailers need is a single system with a built-in web store that integrates any consumer facing device in real-time, links online systems to central business systems, from ERP and CRM to POS, and addresses internet latency and reliability issues across all channels. For many retailers though, the complexity and cost of running a single transactional system that is optimised across all digital channels and integrated into internal business systems is overwhelming.
This is where cloud computing really opens doors, by unifying separate retail channels to provide a single view of the customer, sales and revenue. Cloud computing changes the game plan by offering the opportunity for a lower cost and much lower risk rollout of the software needed to support multi-channel retailing, which is particularly attractive for smaller businesses with limited resources.
Cloud can give you real-time visibility into your entire retail operation, accessible from anywhere at any time, as well as a single view of a customer across all channels. You can also ensure that your order, inventory and financial information are always up to date. Its infinitely scalable nature can give you the confidence that your site will stay open no matter how many customers cross its digital threshold.
Now there is a way to manage multiple channels and locations, integrate your website with your business, support your POS system, provide a unified real-time view of your business, perform automated merchandising and marketing, as well as gain a 360-degree view of each customer so that you can customise your approach to them.
The hard truth is that a successful multi-channel strategy will be the key to the survival of many Australian businesses in coming years, as the online environment accounts for an increasing proportion of overall sales. Getting a multichannel strategy right can deliver substantial and tangible results.
Download NetSuite’s ‘E-Commerce in a Multi-Channel World’ Whitepaper here.