Fairfax Tech Column

Fairfax Tech Column

05.10.2018 Fairfax Tech Column 115

Ask any millennial and they will tell you that ALL sales are now online. It may seem that way – and there is incredible growth in online sales – but there is still some bite left in bricks and mortar. I recently delivered some presentations telling businesses how to make sure they are putting their organisation in the best possible position to compete against the online juggernaut and the secret is to flip the way you view online shopping.

Before I give away those secrets, we should look at this online shopping phenomenon. The five most popular categories are fashion; electronics and media; food and personal care; furniture and appliances; and toys, hobby and DIY.

When you start to look some other stats, you realise why physical retailers are concerned.

In Australia we currently have 88 per cent of the nation with Internet access which, in global terms, is a high proportion. We have 69 per cent of the population active on social media and mobile penetration is at the 78 per cent mark. With more users on smartphones and 35 per cent of e-commerce transactions occurring on smartphones, plus the fact that we are now spending, on average, 5 hours and 34 minutes every day on the Internet, it all looks good for online sales.

With all of these indicators, where does online shopping currently sit? Somewhat surprisingly, ABS data shows the level of online sales at only 4.7 per cent (other research has a figure closer to 7 per cent) but it is rising with a bullet. In the last year alone, the ABS data shows an increase form 3.6 per cent to its current level.

With all that weight of data, do traditional retailers just throw their hands up in the air and lock the doors now? Not quite yet. Online retailers have some challenges that physical retailers can take advantage of. In fact, as much as traditional retailers bemoan the onslaught of online retailers, online sellers hate the advantages that are offered by bricks and mortar – they just don’t like to talk about it.

For a start we live in an instant gratification society. Physical retailers need to ensure they have stock, stock and more stock. When a client walks in, physical retailers need to ensure they walk out with the product in hand. Online retailers have to post out their products. Online retailers can never deliver that satisfaction of holding the product immediately. That also applies when choosing a product. A large percentage of the population still likes the idea of looking, touching and using the product they are about to hand over their cash for. Making a choice from a two-dimensional picture on a screen is never quite as good as holding something in your hand.

That logic also applies with the staff in a physical store. Well-trained and enthusiastic staff that care about customers are going to beat the online experience every single time. That word experience is critical. Physical retailers can make shopping in their store an experience. Make it different, unique, interesting. Make people want to be in the store.

Physical retailers can also offer additional services that an online retailer can never match. Imagine a dress shop that offered to do minor alterations on the spot or a sunglass shop that offered lifetime free cleaning for their customers.

There is also a high trust factor with a physical shop. The shopper can see the store and the people and can return to the location if they need some after-sales service or warranty. The physical retailer can make this process pleasant – which will deliver return customers – or difficult if they want to drive customers away.

And the greatest myth with online shoppers? The physical retailers with dipping sales will tell you that people buy online because of the price. Nothing could be further from the truth. Surveys regularly score in the range of 80 to 90 per cent for the number one reason people shop online. Convenience. The ball is firmly in the court of the physical retailers to deliver convenience and service that attracts people into their shop rather than driving them online.

Mathew Dickerson