A peek into the future of e-commerce

While retailers have been noticing a shift in the holiday season over the last few years, data released by Australia Post on Friday gives shape to what the Christmas period will look like in years to come.

Online sales over the 2019 calendar year grew 17.2 per cent on the prior year, while Cyber Week was the busiest period for online shopping – 82 per cent up on an average week in the same year.

And despite all the talk of Black Friday and Cyber Monday’s impact on Christmas, Australia Post’s head of e-commerce platforms and marketplace, Ben Franzi, told Inside Retail Weekly the impact was equivalent to only around 1 to 2 per cent of total Christmas sales.

“It hasn’t radically eaten into the season, but it did move some shoppers. It delayed and softened the peak, but only ever so slightly. It wasn’t dramatic,” Franzi said.

“The difference [last year] was that it had become an industry standard. Three years ago, it was hardly on the radar. Two years ago, there were early adopters and it was an event, but [2019] was like nothing we’ve seen.”

Retailers, both physical and online, were getting in on the Black Friday and Cyber Monday action, while consumers were far more interested in the sales event than in previous years. This ultimately led to a 31.6 per cent growth for Black Friday year on year.

Compared with the 18 per cent growth Boxing Day saw, down from 27.9 per cent the year prior, Black Friday’s growth is “unprecedented”.

“Boxing Day will always have a place to play, and retailers will always want to grow sales post-Christmas Day. But I think Black Friday and Cyber Monday will continue to grow, cannibalise and impact Boxing Day moving forward,” Franzi said.

Being prepared is key

Based on what Australia Post saw in 2019, Franzi explained, the most important things retailers can do for the year ahead is to ensure they have a solid plan and don’t underestimate the popularity of sales events, and in control of their finances.

“Retailers got caught out by how big Cyber Week was – as did we. It’s going to be really important that retailers don’t make mistakes like they did in 2019,” Franzi said.

“Customers will be less forgiving this year with deliveries that are sometimes two weeks’ late.”

The trends Franzi outlines include the ongoing growth of sales events, speed of delivery and service, making an offer more convenient, and a greater focus on the sustainability of a business’s supply chain and products.

The financial sustainability of a business is equally important, however, as staying on top of every other trend in the industry requires capital to be spent.

This can be seen in the myriad retailers, such as Ziera, that entered voluntary administration or liquidation after attempting massive structural changes.

“The sustainability of a business’s commercials is becoming just as important [as environmental sustainability],” said Franzi.

Australia Post is not immune to these same pressures, with the business’s letter delivery revenue falling 9 per cent to $1.1 billion, while its parcels and services division rose 13 per cent to $2.69 billion in the half year to December 31.

This result ultimately led to a 46 per cent fall in group profit for the half to $83 million.

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