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SAMPLE: State of Ecommerce in Australia and New Zealand in association with hybris software

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SAMPLE: State of Ecommerce in Australia and New Zealand in association with hybris software

Published April 2014

All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopy, recording or any information storage and retrieval system, without prior permission in writing from the publisher. Copyright © Econsultancy.com Ltd 2014

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Contents 1. Foreword by hybris software ........................................... 4 1.1.

About hybris software ................................................................. 5

2. Methodology and Sample ................................................ 6 2.1. 2.2. 2.3.

Acknowledgements ..................................................................... 7 About Econsultancy .................................................................... 7 About the author ......................................................................... 8

3. Ecommerce Landscape .................................................... 9 3.1. 3.2. 3.3.

Market value and growth ............................................................ 9 Consumer behavior ....................................................................14 Mobile commerce ....................................................................... 15

4. Key Players ......................................................................17 4.1. 4.2.

B2C..............................................................................................18 B2B............................................................................................. 20

5. Trends and Developments ............................................. 22 5.1. 5.2. 5.3. 5.4. 5.5.

The retailer mindset shift .......................................................... 22 Multichannel commerce moves to the forefront ...................... 28 Showrooming: threat or opportunity? ...................................... 30 Delivery and fulfilment still seen to hinder the industry .......... 31 B2B commerce in ANZ .............................................................. 32

6. Strengths, Weaknesses, Opportunities and Challenges (SWOT) .......................................................................... 34 6.1. 6.2. 6.3. 6.4.

Strengths .................................................................................... 34 Weaknesses................................................................................ 34 Opportunities ............................................................................ 35 Threats ....................................................................................... 36

7. Recommended Resources.............................................. 38 8. Appendix ........................................................................ 39 8.1.1. Type of ecommerce technology ............................................. 39 8.1.2. Ownership and decision-making ........................................... 41 8.1.3. Respondent profiles ............................................................... 42

State of Ecommerce in Australia and New Zealand in association with hybris software

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1.

Foreword by hybris software We’re pleased to present this report from Econsultancy, commissioned by hybris software, an SAP company, on the state of ecommerce in Australia and New Zealand. The first of its kind in the region, we have commissioned this research to further understand the state of ecommerce in Australia and New Zealand, for both B2C and B2B organizations. We wanted to explore what is being done well, and what the challenges and growth opportunities are for those businesses trying to build and execute on an ecommerce strategy. One of the biggest influencers of the global growth of ecommerce has arguably been mobile technology and Australia and New Zealand are no exception to this. Indeed, Australia has the highest smartphone penetration in the world. It comes as no surprise (but some relief) that the research found that a mobile-optimized transactional website was top of businesses’ wish lists in 2014. Domestic B2C commerce sites in Australia and New Zealand are increasing at a significant rate and it’s now becoming widely acknowledged that a market which has historically been berated to be slow to adopt ecommerce is now surging into a new era of maturity. However, a significant amount of revenue is still going overseas. B2B commerce has certainly not taken off in the same way B2C has in the region, but we expect this to grow dramatically over the next 12-24 months. Two factors are driving this – first, cost pressures are forcing organizations to find ways to streamline operations, reduce expenses and drive a more profitable customer. Second, as business buyers are demanding a more personalized, seamless shopping experience when making purchases on behalf of their companies, suppliers must take action to cater for this phenomenon known as the “consumerization of B2B commerce” or risk losing out to companies that are faster and easier to do business with. Customers do not think in terms of individual channels, but interact with their favorite brands and suppliers across multiple touch points. Providing a consistent experience across all of these is critical as customers want to interact with companies whenever and however it suits them. Only organizations that make it easy for customers to do business with them, regardless of whether they operate B2C or B2B, will survive. This is an exciting time for ecommerce in Australia and New Zealand as organizations identify new opportunities and forge new competitive advantages. I do hope you enjoy reading this report and find it as insightful as we have. Graham Jackson Senior Vice President – APJ & China hybris software

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1.1.

About hybris software hybris software, an SAP Company, helps businesses around the globe sell more goods, services and digital content through every touch point, channel and device. hybris delivers OmniCommerce™: state-of-the-art master data management for commerce and unified commerce processes that give a business a single view of its customers, products and orders, and its customers a single view of the business. hybris’ omnichannel software is built on a single platform, based on open standards, that is agile to support limitless innovation, efficient to drive the best TCO, and scalable and extensible to be the last commerce platform companies will ever need. Both principal industry analyst firms rank hybris as a ‘leader’ and list its commerce platform among the top two or three in the market. The same software is available on-premise, on-demand and managed hosted, giving merchants of all sizes maximum flexibility. Over 500 companies have chosen hybris, including global B2B sites W.W.Grainger, Rexel, General Electric, Thomson Reuters and 3M as well as consumer brands Toys“R”Us UK, Lorna Jane, General Pants, Target Australia, Bridgestone, Levi's, Nikon, Galeries Lafayette, Migros, Nespresso and Lufthansa. hybris is the future of commerce™. For more information, visit www.hybris.com.

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2.

Methodology and Sample The aim of this research was understand how ecommerce is evolving in Australia and New Zealand, looking at key trends and developments, region-specific issues, as well as exploring the opportunities and challenges. The methodology involved three main phases:  Phase 1: desk research to identify relevant issues, examples and trends.  Phase 2: a series of in-depth interviews with a range of digital marketing and ecommerce practitioners.  Phase 3: an online survey of client-side (in-house) organizations and agencies, vendors or consultancies (supply-side), designed to better quantify feedback around some key questions. Three in five (61%) survey respondents work for client-side organizations, whilst 39% work for agencies, vendors or specialist consultancies. For more detailed profiling of respondents, see Section 8.1.3. When asked to describe their business, two-thirds (66%) of respondents said they transact both online and offline, while just over a quarter (28%) of respondents only transact online.

Company respondents Figure 1: How would you best describe your business?

Respondents: 122

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2.1.

Acknowledgements Econsultancy would like to thank the following people for their contributions to this report:  Nick Mead, Country Manager ANZ, Hewlett Packard Snapfish Division  Lawrence Ladomery, Online Marketing Manager, QSR International  Iain Johnston, Managing Director, Carnegie Group  Caroline Everitt, Ecommerce Manager, Devonport Chocolates  James Payne, e-Business Strategy and Development Manager, Coca-Cola Amatil  Adrian Bortignon, Managing Director, Kongo Group  Peter Noble, CEO, Citrus  Chris Vincent, GM, Asia Pacific, Practicology  Matt Hampshire, CEO, contiigo

2.2.

About Econsultancy Econsultancy’s mission is to help its customers achieve excellence in digital business, marketing and ecommerce through research, training and events. Founded in 1999, Econsultancy has offices in New York, London and Singapore. Econsultancy is used by over 600,000 professionals every month. Subscribers get access to research, market data, best practice guides, case studies and elearning – all focused on helping individuals and enterprises get better at digital. The subscription is supported by digital transformation services including digital capability programs, training courses, skills assessments and audits. We train and develop thousands of professionals each year as well as running events and networking that bring the Econsultancy community together around the world. Subscribe to Econsultancy today to accelerate your journey to digital excellence. Call us to find out more:  New York: +1 212 971 0630  London: +44 207 269 1450  Singapore: +65 6809 2088

Other related Econsultancy content State of Digital Marketing in Australia https://econsultancy.com/reports/digital-marketing-australia Australia User Experience Report https://econsultancy.com/reports/australia-user-experience-report Australia Cross-Channel Marketing Report https://econsultancy.com/reports/australia-cross-channel-marketing-report

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2.3.

About the author Jake Hird is currently the Strategy Director for Santoku, a digital transformation agency, where he is tasked with delivering strategic planning and insight to clients, around a full range of digital marketing topics and capabilities. Coming from a background of online commercial research, development and account management, he was previously Director of Research and Education for Econsultancy in Australia, and has authored multiple industry reports, contributing significantly to a body of knowledge that marketers around the world have come to rely on. His international experience spans a wide spectrum of industries across media, entertainment, travel, finance and FMCG and over the years, he’s worked with some of the world’s best known brands. He holds a Masters in Digital Marketing Communications and is well known and respected by many senior marketing professionals. He frequently comments on digital marketing developments and is often called upon to provide insight on changes in the digital landscape.

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3.

Ecommerce Landscape For the last few years, the ecommerce landscape in Australia and New Zealand has increasingly been under international focus. This is due to a number of factors, including a strong local currency in the global market and an almost unprecedented consumer adoption of online shopping and associated technologies. Additionally, major domestic retailers have generally been perceived to be struggling to increase their digital presence in the region – and international retailers have capitalized on this by aggressively operating in the marketplace. More recently, local retailers have stepped up their efforts, with varying degrees of success. However, several issues, such as hindering administration policies (for example, the Australian online GST threshold) and complex and difficult fulfilment logistics have all been cited to be preventing marketplace development.

3.1.

Market value and growth Ecommerce in Australia Due to a variety of factors, the ecommerce markets in Australia and New Zealand show positive momentum. In Australia, the value of the market was estimated to have been around AU$27 billion in 2010, but by the end of 2013, analysts reported that it had grown by more than 35% and is now worth over AU$37 billion.1 However, the rate of growth is…

What the experts say “Perhaps one of the biggest challenges within the Australian marketplace in adopting online is the inherent conservatism of retail businesses traditionally as well as it being a…” SAMPLE

1

Forrester Research

State of Ecommerce in Australia and New Zealand in association with hybris software

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3.2.

Consumer behavior According to research conducted by Morgan Stanley, the vast majority (86%) of Australian consumers have made a purchase online and it’s expected that this will continue to increase as time progresses. This has been demonstrated to mirror the emergence of ecommerce in more established markets, such as Europe and the USA, although the rate of development has been…

Source: AlphaWise, Morgan Stanley Research

State of Ecommerce in Australia and New Zealand in association with hybris software

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4.

Key Players There are a number of notable online retailers in the Australian landscape, but as many analysts are quick to point out, the criteria for selecting the ‘top’ ecommerce websites can vary, depending on what’s being assessed. It’s also widely observed that a large proportion of the top retailers are far from being large, established retailers and many are pure-play businesses. James Payne of Coca-Cola Amatil expands on this: “A lot of the large organizations are slow to adapt and evolve. There are definitely quick wins to be had by smaller, more agile or niche players. “Just look at the online…

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5.

Trends and Developments

5.1.

The retailer mindset shift One of the most notable shifts in the Australian and New Zealand ecommerce markets is that retailers appear to be taking the online opportunity much more seriously than in previous times. It’s public knowledge that many domestic retailers are beginning to invest heavily into ecommerce capability – sometimes millions of dollars and for the most part, are seeing substantial reward through growing online sales revenue.2 However, there is still some resistance t0 ecommerce in the region, especially from…

Figure 2: Do you believe your / your clients’ ecommerce activities are supported at a senior level within the company?

Company respondents: 94 Agency respondents: 61

http://www.businessinsider.com.au/digital-investments-for-david-jones-and-myer-pay-off-as-onlinesales-skyrocket-2013-8 2

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5.2.

Multichannel commerce moves to the forefront Cross-channel, omnichannel and multichannel approaches to retailing have all recently been the subject of much debate in the Australian and New Zealand ecommerce industry. Interviewees were extremely quick to point out that although multiple sales channels are being given large focus, the strategies tying this together are somewhat lacking. This was also further evidenced by the survey data. “Customer journeys are significantly changing. Retailers need to be aware of this,” explains…

Company respondents Figure 3: Do you agree or disagree with the following statements relating to ecommerce?

Respondents: 96

What the experts say “Omnichannel is the word on every retailer’s lips, the focus being on multichannel fulfilment. This is a particular challenge in Australia, with a…” SAMPLE

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6.

Strengths, Weaknesses, Opportunities and Challenges (SWOT)

6.1.

Strengths One of the key strengths of the Australian and New Zealand ecommerce marketplace is the continuing growth of consumer spend, meaning that retailers have a lot of scope to develop their presence. Further to this, the recent strength of the…

What the experts say “Australia is very much a market in transition and we expect a lot of… SAMPLE

6.2.

Weaknesses Unfortunately, alongside the expected weaknesses found within any ecommerce marketplace, such as security issues, the Australian and New Zealand markets equally have a few further issues that may not be found widely elsewhere. The first – and perhaps most important – is the cited resistance to…

What the experts say “The lack of experience and the high cost of entry (to get systems up to scratch) have meant that while businesses have seen online as a key area for growth they haven’t really…” SAMPLE

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7.

Recommended Resources Reports Technology for Ecommerce Report https://econsultancy.com/reports/technology-for-ecommerce-report Ecommerce Platforms Buyer’s Guide https://econsultancy.com/reports/ecommerce-platforms-buyers-guide Building an Ecommerce Team: A Best Practice Guide https://econsultancy.com/reports/building-an-ecommerce-team Ecommerce Best Practice Compendium https://econsultancy.com/reports/ecommerce-best-practice-compendium Mobile Commerce Compendium https://econsultancy.com/reports/mobile-commerce-compendium Digital Marketing and Ecommerce Trends and Predictions for 2014 https://econsultancy.com/reports/digital-marketing-and-ecommerce-trends-and-predictionsfor-2014 Ecommerce Statistics https://econsultancy.com/reports/ecommerce-statistics

Blog posts Australia: Traditional retailers are heading online... and e-tailers are heading off https://econsultancy.com/blog/62736-australia-traditional-retailers-are-heading-online-and-etailers-are-heading-off 30+ interesting stats about mobile commerce in APAC https://econsultancy.com/blog/64306-30-interesting-stats-about-mobile-commerce-in-apac Australian companies face challenges delivering great digital user experience https://econsultancy.com/blog/63156-australian-companies-face-challenges-delivering-greatdigital-user-experience Australian ecommerce: Nine stats you might have missed https://econsultancy.com/blog/62132-australian-ecommerce-nine-stats-you-might-have-missed Five ways to drive international sales online https://econsultancy.com/blog/64559-five-ways-to-drive-international-sales-online

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8.

Appendix

8.1.1.

Type of ecommerce technology Figure 11 shows that over half of companies surveyed (57%) are using a customized package / solution as their ecommerce technology, as opposed to packaged applications (23%) and ondemand SaaS (17%). Further analysis of the data found that smaller companies are more likely to use…

Company respondents Figure 4: What type of ecommerce technology is your company using?

Respondents: 102

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8.1.2.

Ownership and decision-making Respondents were also asked which department primarily makes the decision around which specific ecommerce technologies should be used. The chart below shows that ecommerce or digital…

Figure 5: Which department primarily makes the decision about which ecommerce technology to implement?

Company respondents: 96 Agency respondents: 61

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8.1.3.

Respondent profiles Figure 6: Which of the following most accurately describes your job role?

Respondents: 205

Figure 7: In which country are you based?

Respondents: 205

State of Ecommerce in Australia and New Zealand in association with hybris software

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