Australians sometimes point out that as a people, we're not that interested in "direct" shopping, either by catalogue or online. "Americans have a tradition of buying things from catalogues, whereas we don't" is often said, usually as an explanation for why Australian retailers are reluctant to embrace e-commerce.
On the face of it, it's true. Direct marketing is ubiquitous in the U.S. and has been for generations. Since the late 1800s, when railroads made postal delivery affordable, retailers such as Sears and Montgomery Ward built enormous businesses through "big book" catalogues. The reason for their success was simple: farmers, who were the majority of the population, could get much better value from Sears in Chicago than at the local general store.
This "direct" retailing model never took off in Australia although I'm not sure why. Our smaller, more urban population, higher postage and shipping costs and more fragmented, state-based economies are probably all contributing factors.
What I do know is that Australian shoppers will happily embrace retail innovations if they deliver value and convenience.
Australians love to shop from "big box" warehouses like Bunnings (a DTDigital client) and auction sites like eBay, even though there's no long-term tradition for them here (or in America, for that matter). In the last year, the hugely successful launch of Costco in Melbourne provides even more evidence that Australians are open to new retail business models if they deliver value for money.
As it was for these new retail models, value for money has been a huge driver behind the global growth of e-commerce. In the U.S., online buyers get online-only sales, and often (as is the case with American bookstore chain Barnes & Noble) much lower everyday prices online than in the same retailer's stores. What's more, free shipping is a standard offer from sites like Amazon.com (for purchases over $25) and Gap.com (for purchases over $50), but it's highly unusual from online sellers here. Amazon subsidiary Zappos.com even offers free shipping on returns.
Yes, these costs eat into the bottom line. During its early years, Amazon was jokingly referred to by some as Amazon.org since it was burning through so much cash. Yet ten years later Amazon's market value is US$66 billion, and it earns about US$1 billion a year.
With the AU$ at record highs, the experience of shopping online from overseas retailers feels a lot like those midwestern U.S. farmers must have felt a hundred years ago when buying a sewing machine from Sears. An increasing number of overseas retailers like Gap.com have made Australian dollar pricing and shipping part of a seamless online shopping experience. Even shipping costs to Australia, which in the past could be prohibitive, are becoming a non-issue. U.K. discount bookseller The Book Depository now offers free shipping on everything, worldwide.
Back at home, many of Australia's big retailers, like Big W, Myer (a DTDigital client), and David Jones, are investing significantly in e-commerce, but they still lag online-only start ups like Catch of the Day and Deals Direct. Catch of the Day says it's on track to achieve $110 million in revenue in FY 2010-11.
Given their trusted names, deep pockets, multi-channel promotion/service opportunities and long-standing supplier relationships, big retailers have huge advantages over online entrepreneurs. But the specialised focus of online-only retailers make them fierce competitors in the online space. That's why, over the long term, the biggest game-changer could be the local arrival of subsidiaries of huge online-only retailers like Amazon.com.
Amazon has already set up local businesses in Canada, China, Japan, the U.K., France and Germany. With our high dollar and growing economy, I wouldn't be surprised if Australia is squarely within Amazon's global expansion plans. "Amazon.com.au" could end up proving just how Australian e-commerce really is.