Against a background of global headwinds including increased costs and supply chain pressure, a 10 per cent US tariff on Australian goods, AI becoming retailers’ top strategy, and the rising popularity of online marketplaces, the Online Retailer conference kicked off in Sydney on Wednesday.

The cream of Australia’s online retail industry attended the first day of the event, at the ICC in Sydney’s Darling Harbour, to discuss the future of e-commerce, with a packed line-up of presenters. 

Online marketplaces 

Australians now shop from an average of 16 online retailers a year, reflecting the rise in market fragmentation, according to Gary Starr, Australia Post’s executive GM, parcel, post and e-commerce service. 

Around 47 per cent of shoppers begin their product discovery on online marketplaces as opposed to Google. 

“Online marketplaces have become the number one online shopping destination for Australians – 40 per cent of growth in online spend came from marketplaces like Amazon, Temu, and Shein,” said Starr. 

“The platform effect is a double-edged sword for retailers – on the one hand, marketplaces can amplify reach, on the other, they amplify competition and squeeze margins,” he said. 

Online retail leader and ex-CMO of Adore Beauty, Dan Ferguson, said social commerce was on the rise, with people spending more on platforms like Temu. 

As marketplaces are introduced to traditional brands like Walmart, Ferguson highlighted the importance of changing business models and adding more headroom to businesses. 

Although marketplaces seem to be the future of retail, Goran Stefkovski, Kogan’s CTO, warned retailers that it could cannibalise their businesses.

The chances of marketplaces negatively impacting search keywords, especially when retailers have millions of products in their inventory, are extremely high.

“The products you want to sell may not be selling anymore,” said Stefkovski. 

“Customers start going through [the website] and can’t find any of the products they actually want to find, and they’re shocked by the marketplace offering that’s showing a lot of irrelevant things.” 

Stefkovski encouraged retailers to collaborate with sellers on their platforms to enhance search and discoverability, as well as to prioritise bestselling items. 

The challenge seems to lie in delivering a marketplace experience that is as good as a first-party sale. 

Amazon, which derives 60 per cent of its worldwide sales from marketplaces, achieves this through its Fulfilment by Amazon model.

“The customer will choose based on selection and pricing,” said Guillermo Rodríguez Diez, GM of third-party marketplace, at Amazon Australia.

“We will do the work, behind the scenes, to ensure that sellers have the power to have same-day delivery or next-day delivery, which we have the power to achieve through our Fulfilment by Amazon model.

“They have the same tools that our one-p vendors have,” he said. 

E-commerce and re-commerce

“Our e-commerce market is the biggest it’s ever been, and the smallest it will ever be,” said Australia Post’s Starr. 

With the rise of re-commerce and online marketplace integration, e-commerce is undergoing constant evolution. 

In the US and Europe, re-commerce is expected to grow two and a half times faster than traditional retailers.

Younger Australians are “monetising their closets and hunting for bargains”, with 65 per cent of Gen Z and millennial shoppers in Australia intending to buy more second-hand items over the next five years, according to Starr.  

He predicted the next decade of e-commerce would consist of social media storefronts, as social networks have become full-fledged commerce platforms. 

“Roughly half of Gen Z and millennial consumers are now shopping via social media at least once a week,” said Starr, who recommends creating stories that flow seamlessly into purchasing opportunities.

“Consumers want to check out without leaving their feed – platforms are enabling this with shoppable posts, livestream shopping events, and integrated carts,” said Starr. 

“The future of e-commerce will be as much about scrolling and swiping as it is about searching and browsing.” 

Retail media

Ferguson stated that using macro headwinds to establish an exclusive brand strategy would be crucial to a business’s longevity. 

“Retail media adds a really meaningful margin and profitability to a business,” he said. 

Online retail media, such as banner ads and sponsored results, are accessible and can be sold immediately to current suppliers and brands, creating solid value for several quarters. 

In-store retail media, which is generally nascent for e-commerce businesses, provides the opportunity to bring different audiences together and create personalised experiences based on data collected through other avenues. 

Stefkovski said retail media was a useful tool that allowed sellers to promote their sales cycles, product launches and more.

“As the market broadens, sellers and brands want to be able to differentiate; media is a mechanism to differentiate,” said Mark Mansour, chief development and strategy officer, Woolworths MarketPlus. 

Retailers can use AI to ensure that all kinds of product listings undergo a validation process, analyse user interaction data to increase personalisation, and leave room for third-party sellers to create their own product destiny through retail media campaigns.