Major retailers finally going online

As the retail sector experiences a downturn in sales, many Australian retail giants are turning to the internet to survive.

Harvey Norman just launched a daily deals site and Myer recently announced an offshore e-commerce website.  It’s taken them years to finally realise the power of the internet and in 2011 they are all jumping on board to accommodate the demand of growing online customers.

Whilst it is growing strongly, online retail is still a niche market with online sales accounting for only 3.4 per cent of Australia’s total retail spending.  Although this may sound small, it’s actually a booming industry which will be worth $37 billion in Australia alone.  So it’s no wonder that the retail giants are heading online.   With the recent $80 million investment made by James Packer in CatchofTheDay.com.au for a 40% stake in the company shows how many investors are seeing online as the future.

Another online shopping sensation is voucher and deals giant Groupon (called stardeals.com.au in Australia),  most people might be aware of a lawsuit between Scoopon.com.au(an Australian copy) where Scoopon registered the domain name, Groupon.com.au.   Groupon is dubbed the fastest growing company in history, where the company is expected to apply for an IPO in the coming months, would value Groupon at US$30 billion, not bad for a company which only founded in November of 2008.

Last week clothing retailer Colorado announced its collapse, revealing plans to close more than 109 stores. Just weeks before, heavyweight bookstores Borders and Angus & Robertson closed 82 stores. This highlights the dire state of traditional retailers who are hurting due to the increasing popularity of online shopping.

Experts are tipping eCommerce in Australia to grow around 20 per cent of total spending, while traditional retail sales sit at 2.7 per cent. But why is shopping online so popular? For one, the internet isn’t restricted by physical space the a traditional store is. It’s limitless. Consumers can shop for anything whenever they want. They’re not restricted by store operating hours and can purchase at the convenient click of a mouse. Most stores even offer discount postage if you buy multiple products.

The online world is going to be a tough market to compete in for traditional retailers considering large US competitors, the strong Australian dollar, and low barriers to entry. Any Australian small business can create their own online shop and start competing with the big brands online. With the right online marketing strategy a small business can often be more successful in their category than big retailers.

With Australian retail sector experiencing the worst year in two decades and online retail growing strongly, the future of Aussie retail is definitely online.