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THIS WEEK
Sales Lessons from the Productivity Commission - How to Compete with Online Retailers if You Are a Bricks & Mortar Business
ALSO IN THIS EDITION
Sales Lessons from the Productivity Commission - How to Compete with Online Retailers if You Are a Bricks & Mortar Business
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Yesterday the Productivity Commission handed down its draft report on the Economic Structure and Performance of the Australian Retail Industry.
A lot of the report is simply charts, tables and stats reflecting things that we had already guessed, but now have confirmed. For example: online sales are growing rapidly; the majority of people who buy online using their smartphones are between the ages of 20-39 years; the main things people buy online are CDs, DVDs, music, clothes, sporting goods, electrical goods, software, electronic goods, toys, books and cosmetics. In other words, in general, people buy smaller, non-perishable, easily shipped items online.
But once you get past the "yeah – already know that" point of view, there are some useful nuggets of information buried amongst the 461 pages.
Essential Information You Need to Know
The Productivity Commission found that over the past 3 decades, consumers were spending less of their incomes on retail, and more on financial services, property and accommodation, travel, education and hospitality.
They also found that bricks and mortar retailers are unlikely to be affected by online retailers where customers value personal interaction, physical presence or immediate fulfilment.
Traditional Advertising is Dead
The Commission found that consumers no longer rely on traditional forms of advertising or product tests to learn more about a product. Instead, they pointed to the growth of product review websites and consumer discussion sites as one of the dominant ways people learn more about products.
Why People Buy Online
They also dug into a few recent surveys working out why people actually buy online. The top three reasons found were:
- Lower price
- Greater choice
- Convenience.
Reasons Why Traditional Retailers Can't Compete
The Commission then looked at artificial barriers to why bricks and mortar retailers were not competing on these three things, including zoning, trading hours regulations, leases, parcel processing and workplace practices.
To be honest, while there was a lot of high-level discussion and recommendations for additional reviews on these barriers, by the time many of these new reviews would complete, the horse would have bolted.
The reality is that there always has been competition between retail stores on price, choice and convenience. If you shopped around, you would always find price differences. All that has happened with online retailers, is that this competition is now more transparent.
And now ... Some Good News
But it's not all doom and gloom. A few pluses came out of the report. Surveys showed that 2/3 of Aussie consumers preferred to buy from Australian websites. Why? To support local industries, people didn't trust overseas websites, the goods were only available locally, taking postage into account – the goods were cheaper here, it took too long to get the products from overseas and it was easier to return goods if there was a problem.
It also found that ¼ people will not shop online because of concerns about security, and 12% will not shop online because they don't want to give out their credit card details online.
What You Need to Do Now
What should you take away from the report?
1. Get online – if you are not there, you will not exist in a few years.
2. Make your site viewable on smartphones – particularly if your clients are between 20-39.
3. Ensure you have payment options for people who don't want to buy online.
4. Watch industry spending trends – are you in a growth industry or one where sales are dropping?
5. Realise that social media is here to stay. If you want to stay in business, you need to move a portion of your marketing focus to where your consumers get their information.
Key Marketing Take-aways
And finally, the report gives you a simple blueprint for your marketing if you are competing against online businesses.
Emphasise your:
- personal interaction,
- physical presence,
- Australian presence/local industry,
- instant gratification,
- value for money,
- unique nature of your products,
- simple return policies and
- tailored options.
These are what make you stand apart from online stores.
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Legal stuff: This newsletter is intended as only a general guideline for Australian businesses. You should seek specific advice for your situation rather than relying only on this newsletter
Earnings disclaimer. Some of the content may include advertorial information, which means I may receive financial compensation for the products I recommend. But - unless I know and trust the product, I will not recommend it.
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