Benchmarking websites against one another is no easy feat. With so many elements comprising a successful e-commerce operation, how do you weigh each of the components?
To put together Inside Retail Magazine’s first annual Top 20 Australian e-commerce site, we’ve used a combination of factors, including ease of use; success and profitability; look and feel; popularity; and fulfilment.
Of course there are many other successful retailers operating in Australia at the moment, and this is just a snapshot. This list also does not take into account online supermarkets.
Big W tops our list, as a result of its pioneering approach, high traffic levels and value adds, including online layby, click and collect options, and extensive product range.
Notably absent from the top 20 rankings are the two department store chains, David Jones and Myer.
Although both have stepped up their game in the past 12 months and are now genuine competitors in the online sales market, the pair are both still a ways behind in both depth of product, service, and fulfilment.
At number two is the current flavour of the month, The Iconic. Headed up by Adam Jacobs and Finn Haensal, while neither has prior experience running a retail business, the host of young staff and consultants the pair has brought on to get the start up off the ground have plenty.
The Iconic, off the back of a raft of publicity in its first 12 months, quickly amassed a following of loyal fans, taken in by the site’s speedy fulfilment, wide range of products and functionality. Service, of course, is paramount to The Iconic’s success, backed up by live chat as well as a sizable call centre. (Part of which, has coincidentally has just been outsourced to an India.)
Sportsgirl is the first fashion retailer on our list, and is somewhat of an old hat when it comes to the e-commerce and omni-channel game.
Sportsgirl was among the first bricks and mortar youth apparel retailers to truly embrace the medium, introducing a blog, multi-media, competitions, and forums early in the piece.
While other female fashion rivals have rushed to keep up, Sportsgirl has continued to refine it’s online offer, linking it back to instore, and introducing other new technologies, as seen by its push 12 months ago to introduce QR codes.
Deals Direct deserves its place at number four on list, as the frontrunner for other online department store models. Run by Paul Greenberg and Michael Rosenbaum, the pair cut their teeth with an eBay store which went on to become eBay’s biggest Australian seller.
Deals Direct as we know it today was born in 2004, and has since gone on to acquire a host of other e-commerce outfits and has attracted the investment of James Packer’s Elleston Capital.
At number 15, OO has a similar story. Starting out as a top eBay seller, it claims to be Australia’s biggest online department store. Also established in 2004, it is operated off much the same premise as Deals Direct with its success coming from its vast number of product categories and long history (for an e-tailer that is!).
Rounding out the top five is electronics retailer, Kogan. Say what you want about CEO and founder, Ruslan Kogan’s big noting ways, he’s managed to build a successful e-commerce business on the foundations of value, service, and vertical manufacturing.
Kogan originally started out selling solely the Kogan brand of electrical appliances, before branching out to include other more mainstream names, and most recently, offering mobile phone data and call plans.
Kogan the man is known creating public controversy in the industry and for his rivalry with Harvey Norman, challenging its founder, Gerry Harvey, to a television debate in 2010, which Harvey declined.
Electronics are big business when it comes to online, driven by low prices and the lack of a need to touch, feel or try on an item before purchase. At number six is Dick Smith, which has run a tight online operation for a number of years, stocking a great number of its instore products online and advising customers upfront of their availability.
The two other sites on Inside Retail Magazine’s list to fall into the electronics and appliances category are JB Hi-Fi at 17 and Appliances Online at 19.
JB Hi-Fi makes the list a number 17 because of the power it wields in the market, and its consistently high traffic figures.
While there are some who praise the site, Inside Retail Magazine has heard several complaints about slow delivery and a lack of customer service, and the site’s navigation could be improved, which is why it falls lower down the list.
Two private sale clubs have made it to the list in OzSale at number 8 and BrandsExclusive at number 15.
BrandsExclusive was the first private sale club to hit the Australian market in 2009,and has grown steadily, having just undergone its first rebrand and the launch of LivingExclusive, a furniture and homewares spinoff.
Both OzSale and BrandsExclusive have had success through the sale of runout, discontinued, and overstocked products to a invitation-only subscriber base, using a limited time only propostion. The ‘private’ component of the offer is designed to protect those brands that have utilised the sites to clear stock, to ensure the brand is not devalued by the appearance of discounting.
Catch of the Day at number eight is the brainchild of Gabby Leibowitz, who has built a small empire and cult following of consumers by using a 24 hour only offer. Products are available for a finite period and rotate daily, available only until they’ve sold out.
Leibowitz has capitalised on the success of Catch of the Day and has also established the Grocery Run, VinoMofo, Scoopon, Mumgo, and Eat Now sites, all of which target consumers with extreme value propositions.
Justus Wilde, MD of e-commerce consultancy, Amblique, agrees that picking a list of 20 top retailers is a difficult task.
“The metrics are so hard because some businesses with not very much volume get a lot of air time. There are some people who get a lot of publicity, but in terms of financial turnover or size of business they don’t really compare.”
Wilde, who has 35 retail clients on his books and is an expert in the medium of online retailing, says that e-commerce is “many things done well”.
“There is a bit of an eco-system in terms of not just technology, but retailing concepts that have to be right. Only when you have all of those things working in harmony can you have a really strong offering,” said Wilde.
“Some sites get around it by being super strong on price, and being an impressive price player you can get away with not having the best service – there’s that balance.”
The key elements to a top performing site of course are delivery, price and depth of product, however, the most important and overarching attribute is to offer a superior customer experience.
“Fulfilment and service makes a difference in getting repeat customers. We’ve got some clients that are much smaller with 10 stores doing way more turnover than other clients that may have 180 stores, and the difference online is customer loyalty and the service they provide. At the end of the day, retail is detail,” said Wilde.
Despite the prevalence of pureplay operators on Inside Retail Magazine’s list, Wilde says he thinks the best option is to be an omni-channel retailer with a large store network.
“They have the best of both worlds in terms of reach and a large distribution network.
“For instance, if you are a Country Road or one of the department stores, you should be able to have three hour delivery across the country. An Iconic or Asos is never going to be able to do that, it’s just not feasible.
“Furthermore, people can just walk back into the store and exchange the item then and there, so the customer service could actually be a lot stronger for an omni-channel player.
“Very few are there yet, but we’ll see a lot of development in the next few years.”
Katherine Milesi, partner at Deloitte Digital, says that while many of the bigger e-commerce sites make up top 20 lists, some of the smaller sites have the ability to be more nimble.
“Along with having a website you need to have the ability to market to customers in a really targeted, location-based, and context aware way, which will mean traffic will be up from new people and also existing customers coming back again and again,” says Milesi.
Some categories are more suited to online than others, but fashion particularly has come a long way in the past 12 months, stimulated by overseas players such as Yoox, Asos, and Net-A-Porter.
Of course, international websites have always had the jump on the locals, with giants like eBay and Amazon dominating lists of Australian’s most visited sites.
“eBay still gets about 80 per cent of shopping traffic in Australia, they are so far ahead of everything,” says Wilde.
And while David Jones and Myer clamour to catch up to the rest of the pack, perhaps the world’s most successful bricks and mortar department store, UK-based John Lewis, has left them all in its wake.
More than 23 per cent of John Lewis’ annual turnover is derived from online sales, a huge feat when you consider that the chain comes from a traditional bricks and mortar background and has been trading for 150 years next year.
Having said that though, while the rate of e-commerce growth in Australia has slowed, it still continues to outstrip that of bricks and mortar, posting annual growth figures traditional retail can only dream about.
“I’ve just done some research on our client base (which includes a lot of apparel retailers) and we we saw something like 124 per cent revenue growth across 35 retailers. That’s big numbers,” said Wilde.
“It’s never going to overtake bricks and mortar retail, and what the exact final number is going to be, who knows.
“I don’t think it’s unreasonable to think that we could get to 15 per cent (of total retail), and then maybe with more electronic channels and mediums, potentially 25 per cent.”
This story originally appeared in Inside Retail Magazine. The August/September issue, featuring exclusive coverage of the 2013 Westfield World Retail Study Tour is available now. For more information, click here.
