As I settle into my seat in preparation for the epic 24 hour flight home to London, here are a few pointers I picked up during my week in Sydney that should be useful if you are one of the increasing number of British (and other international) retailers launching your Australian eCommerce operations.
1) eCommerce is still relatively underdeveloped in Australia
Despite the obvious attraction of Australia being an English speaking market, its certainly behind Europe in terms of eCommerce, with only 6% of total retail sales taking place online compared to 12% in Germany and over 15% in the UK. Broadband speeds don’t help this, with Australia not ranked in the top 50 world markets for broadband speed and if you have your servers a long way from Australia then your website is likely to load at a snails pace.
One British pure play retailer who are spending big on growing their presence here took a full 48 seconds for their homepage to fully load when I tested it. Get someone on the ground to check how quick your site is in Australia – it’s often much slower than testing tools tell you.
2) British fashion is very competitively priced
Australian retailers have historically charged a premium for fashion (as is true for most other industries too I’m told) given Australia’s distance from most international markets and the fact that in the past they could get away with it. Cross border eCommerce has brutally exposed this and the rapid and huge early success of British brands like Asos in Australia was a direct result of this.
Australians are savvy consumers and now they can buy from anywhere in the world and get it shipped to Australia (often for free and often quicker than for domestic online orders) the local retailers must really be hurting. A clear example was the earily quiet local retailer stores with 25% off in their windows compared to very busy stores and queues at the counters in H&M and Zara and no promotional activity on display.
3) Counter seasonal fashion is a challenge but not impossible
Nearly all international retailers launching into the Southern Hemisphere will have challenges with the fact that our winter is their summer and featuring heavy winter coats on your homepage is unlikely to endear you to Australian customers or drive many sales. However consumers here are pretty understanding of this challenge and in my experience will give you the benefit of the doubt, especially if you are able to tailor your content to the local seasons and merchandise your product listings pages accordingly so that the lighter-weight products are near the top during the Australian summer.
Unless you have a range like Asos of 70,000 products that can pretty much serve all markets in all seasons though it’s likely that your range of seasonally relevant products will fall short and Australians will inevitably buy from your Sale section containing last seasons summer range at 70% off – this needs to be managed carefully, otherwise you risk building an unsustainable market with very low margins. Very few British retailers that I know are buying and featuring product specifically for the Australian market and I think it’s something you can work around, especially if you have a wide range and you’re clever about how you manage content and merchandising on your Australian website.
4) Fashion is a lot more sporty in Australia
Walking around Sydney on a Saturday morning I’ve never seen such a high concentration of people in ‘sportswear’ and even during the week the fashion look here is so much more visibly sporty than I’m used to seeing in Europe. This is backed up when you look at the website of leading online fashion retailer in Australia ‘The Iconic’ who merchandise sportswear ahead of fashion on their site – visibility very different from how Zalando (their European Rocket Internet sister) merchandise their website. Again, you’re unlikely to drastically adapt your range for this, but it’s important to be aware of when merchandising and localising your content.
5) Digital marketing alone won’t be enough
Backing up my first point on the maturity of the market, you won’t be able to build a decent size affiliate programme in Australia as volume affiliate just don’t exist and the sector is still undeveloped. Similarly search volumes are relatively low (not surprising given the population of just 23m) meaning you’ll need to look beyond just digital channels to grow your business here. International brands are very visibly spending big here on non digital advertising (outdoor media, inserts, magazine campaigns etc) and Asos even hosted a fashion show at the Sydney Opera House a couple of years ago to boost brand awareness. Partnerships, traditional media and PR still play a big role in Australia, something that becomes very apparent once you’re on the ground here.
6) You don’t need a physical presence on the ground but but do need to spend some time here
This is very much my mantra for managing and growing any international market. You need to speak to your customers (in person), walk into your local competitors stores, observe what people are wearing and take in the local surroundings (weather, transport, advertising etc) to really start understanding the market and how you should approach it from a brand and customer acquisition perspective.
You also need to meet with your local partners (current and prospective) and tap into their knowledge of the market. I learn more from those meetings and lunches than I do from the plethora of market research documents available online and they do take you seriously if you’re prepared to fly half way around the world to meet them. Doing business with partners is 10 times easier once you’ve met in person, meaning you going to need to jump on a plane at some point.
7) Returns are expensive, and free (to customers) is becoming the norm
Even if you offer a local returns address in Australia and you pay the returns costs back to the UK (which these days is the minimum requirement for an international retailer to do business in Australia) it’s likely this won’t be enough to satisfy customers, especially as a fashion retailer with circa 30% returns. Local shipping rates through Australia Post are high – over £10 for a box of shoes – and that’s just to send from a post office in Sydney to a returns hub in Sydney. Add to that a lengthy wait in the post office (sounds just like the UK!) and you can see why customers are frustrated with returns here (and it’s clearly holding them back ordering more online).
Parcel Point is new to the market, is a carbon copy of Collect+ in the UK and I’m sure will be very successful once they boost consumer awareness of their proposition and rates, which are much cheaper than AUS Post. With international retailers now starting to subsidise completely free returns and the local players upping their game on returns (mainly free to store) it won’t be long before you’ll be expected to cover free returns for the whole journey back to the UK – get ready for that tricky conversation with your FD.
8) Delivery in a week is good enough, but needs to be free
Despite The Iconic having created a lot of buzz around their ‘3 hour delivery within Sydney’ most people I spoke to were unwilling to pay for such a service and didn’t mind waiting a week for delivery, as long as it was free. ‘Free’ seems to be the main driver of delivery service in Australia and the previously low expectations on delivery speed set by local retailers (who often take up to two weeks to deliver!) has helped international retailers who have a reputation for better and quicker delivery.
Although I’m told the Iconic’s 3 hour delivery works well and is great when you desperately need that last minute dress for a party, I understand the usage is low, especially outside of the Friday lunchtime rush for parties that evening. Despite what the media might tell you, my experience is that there isn’t the customer demand (yet) for same or next day delivery in Australia.
So, there it is, hopefully some useful tips to help you crack the Australian market – you’ll already know how important mobile is here and how Australia is likely to have the highest PayPal usage of any of your markets etc etc but hopefully being on the ground I’ve flagged up a couple of things you maybe hadn’t considered.
Time for a sleeping tablet and a glass of red wine now.
Good luck Down Under and definitely come visit, Sydney is an amazing city.
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