The rise of online retail Reply

A Wayfair welcome to global e-shopping

by Jason Liauw

“I love shopping in the comforts of my own home at the click of my fingertips,” says Maychely Rianto, an enthusiastic bargain hunter that has purchased everything from clothing to groceries over the internet.

An analysis by leading accounting firm PwC Australia reveal she isn’t the only one enjoying the new trend of online shopping. It is expected that 88 per cent of online shoppers will maintain or increase their online expenditure over the next 12 months, to reach a projected online sales figure of $29.6 billion in 2016.

The hype of this growing industry has resulted in a new breed of retailers trying to establish their presence in the online marketplace. Wayfair, the largest online retailer of furniture and homewares in the US, is looking for the same achievement here in Australia.

Alicia Kaper, Senior Category Manager from Wayfair’s head office in Boston, has recently relocated to the Sydney office and provides insight into the differences between the US and Australian market.

“Suppliers and consumers in the States are generally more comfortable with the entire order and delivery process,” she says. “Right now we are encountering the same road blocks back when I first joined Wayfair in 2006. Suppliers are very concerned about the uncertainty of e-commerce and the effect it will have on their brick and mortar retailers.”

Click Frenzy is an upcoming Australian first event that the creators, Power Retail have labelled as “the sale that stops the nation”. It marks an interesting milestone for e-commerce in Australia as the 24-hour sale event, commencing on the 20 November at 7 pm has been designed to replicate the highly successful Cyber Monday in the US.

Mike Henriques, Managing Director of Wayfair Australia is excited that Wayfair is participating in this event and hopes for an increase in online retail momentum in Australia. “Click Frenzy will help to initially raise awareness and introduce consumers into this new world and get them comfortable with making online purchases,” he says.

“It is also a good opportunity to demonstrate to suppliers that we offer a sustainable and long term channel to participate in. We’ve had discussions with suppliers who, in the past, have worked with online companies that have failed to execute the correct strategy and devalued their brand image,” he says.

Mr Henriques emphasises that Wayfair operates on a different model. “We work together with our local suppliers and manufacturers and look for opportunities to build range across our site. In doing so, we offer our consumers the greatest selection and range at every available price point.”

He uses the lighting category at Wayfair as an example. “There are currently 20,000 lighting products on our site. I doubt there is anyone in the country right now that can offer this many products in the one place.”

Alicia Kaper says that for an e-commerce company to really be successful in the long term it has to provide outstanding customer experience, including delivery, which “is very much hindered by the practices of freight companies in Australia.”

She believes Australia has a set of unique challenges, mainly stemming from the geography and lack of population dispersion throughout the country. She says there is little competition in the freight industry so freight companies have little incentive to adapt to the specific needs of a drop ship company like Wayfair. “I think this part of our business will be slower and more challenging to improve than it was in the US,” she says.

The retail industry in Australia is at a critical juncture, although not everyone is excited about the change. Harvey Norman’s CEO, Gerry Harvey told BusinessDay “online retail is all about spin and bullshit”, and reluctantly participates to not be “labelled as a bloody dinosaur”, after reporting a 31.6 per cent ($79.78 million) decrease in net profit for the 2012 financial year.

Mr Henriques says “People argue whether or not online retail is a good or bad thing, but at the end of the day it is what the consumer thinks, not the retailer.”

He adds: “We have invested a significant amount of resources to keep consumers happy with what we do, such as providing pre and post-sale services.”

“With our 10 years’ experience in the US, there is no doubt that this brand and shopping experience will become a household name in Australia. We’ve seen such fantastic growth over the last four years and an enormous amount of consumer sentiment. We know what works,” he says.

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