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Pure plays find e-tail more challenging
Phil Harpur (pictured), senior research manager at Frost & Sullivan, believes that the “pure plays” tend to find it more difficult to succeed in the eCommerce market.
The Australian eCommerce Market 2010 report notes that a significant proportion of new entrants fail to succeed in the long-term, but Harpur believes this has been over-played somewhat. “One’s that tend to fail are smaller players who haven’t thought out their business strategy. It’s also more of a challenge for the pure plays [those with no physical store presence].” 
The report also states that 64% of internet users in Australia have purchased goods and services online in the past year, which is on par with the UK and ahead of New Zealand yet behind the US. While this sounds positive, Frost & Sullivan estimates that 40% of shopping online expenditure is spent on overseas sites.
While the number of local e-tailers in the Australian market has increased significantly over the last five years, the volume of local transactions has not followed suit. The report notes that several Australian chains need to launch an online store to provide a catalyst for expansion.
Harpur commented, “The Australian market has made good progress, but we lag behind mature markets.”
“We are not a mature-channel, yet not an immature channel,” Harpur said. “Momentum will continue to build,” he added.
The report lists three main market inhibitors to local eCommerce adoption:
- Strong physical store presence—a high proportion of Australian residents live in metropolitan areas and are surrounded by shopping centres. “They need a compelling reason to shop at home” according to Harpur.
- Limited mail order house development—Australia does not have a strong mail-order and catalogue culture, which were the precursors to the development of online retailing behaviour.
- Lack of competition in postal-delivery services—Australia Post dominates the Australian postal and delivery system, whereas in more mature markets like the US there is more competition.
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