Australian online retail lagging
By Sarah Falson on Jun 15, 2007 3:34PM
The local market still has a long way to go in the online retail-stakes.
“Online retail is still relatively untapped in Australia. I think this is because of a number of factors including geography – we are a big country with a small population; transport logistics; and we don’t have the history that Sears of JC Penny does in the US as we and other online retailers are relatively new companies,” said Greenberg at a conference in Sydney today.
DealsDirect.com.au was launched in October 2004 to tap in to a trend of online buying that Greenberg and his partner, Michael Rosenbaum, saw emerge in conjunction with eBay.
Both co-owners had experience in the field of e-commerce since 1999, which gave them the foresight to base their business model on a department store or ‘warehouse’ business instead of a straight online auction site.
“We are a retail business that uses the internet as our trading platform. I don’t think Harvey Norman should lose any sleep over us just yet,” said Greenberg, whose 40-employee-strong business is based in Sydney’s outer suburb of Punchbowl.
According to Greenberg, online retail is still in its infancy in Australia, but the concept is not a model to be sniffed at.
“Online retail, if not strong in Australia, is coming. It is not a passing fad,” said Greenberg, who recently attended an online retail conference in the USA along with 4,500 other delegates.
“You’d be lucky to get a few hundred at a similar conference in Australia,” he said.
“But this does not mean we are not a clever country. Our Government needs to roll-out faster broadband internet speeds to begin with – any online retailer would be disappointed at the speed of broadband we’re using. It’s too slow and we’re getting left behind.”
Greenberg also touted the difficulties related to cross-trading, making the online retail business tougher still.
“If we had known what we know now we wouldn’t have embarked on the journey – it’s too damn hard. The world is getting smaller – there’s too much cross-aborted trade. To protect your patch is going to get harder. We are talking to some well-known brands with an interest to stock them to set us apart from the crowd,” he said.
But bricks and mortar retailers will continue to hold the largest market share for a while yet, according to Greenberg.
“I can’t claim to fully understand offline retail, but Woolworths and David Jones own the marketplace – they were the first there. If more owned the marketplace and spread it between them there would be more opportunity for online retailing,” he said.
Online retailing is not doomed however, with Greenberg singing its praises in light of his grievances with Australia’s lagging contribution to the market.
“Online retail is borderless. You can sell anything, any time. But there is still the pain of change – most retailers think, ‘if it ain’t broke, don’t fix it’.
“But as they say in the USA, ‘the trend is your friend’. One can’t argue with the efficiency of the online retail model, so we are positive that the local market will change to more fully embrace online retailing.
“If Big W or Kmart started selling online, it’d open up a while new space for all of us.”