Why the time has never been more right to enter online marketplaces in Australia
Australia’s unusual geography and population distribution have long made it something of an outlier when it comes to ecommerce. In a small and densely populated country like Denmark, online shopping is relatively easy – you can more or less throw a parcel from your warehouse door and expect the recipient to catch it – but on our vast continent, the huge distances between major cities have made logistics and delivery both slower and more expensive, cutting into profit margins. As a result, online shopping has often lagged behind in Australia even as it became a norm in similar economies around the world.
You can tell something is a real issue when even Forbes writers comment on it: “As an Australian living abroad, this phenomenon surprised me every time I returned home and attempted to make purchases online: Options were limited, pricing wasn’t competitive, and I’d often have to—gasp!—pay for shipping.” Commentators have long predicted e-commerce will become a much larger part of the economy, but customer behaviour has stubbornly lagged behind their crystal ball gazing.
However, in this, as in so many other things, coronavirus has proved a great leveller. Simple necessity has driven a huge boom in online shopping. Australia Post has been able to see the enormous rise in online shopping first-hand through its deliveries, and estimates there was an 80 per cent increase in online shopping over the eight weeks to May 15, compared to last year.
Accent Group, the footwear specialists responsible for chains like Sketchers and The Athlete’s Foot, have been surprised by the rapidity and scale of the change. Digital sales soared from an average of $250,000 a day in early March to as much as $1.1 million a day at the end of April. 45% of the company’s sales are now online, and it predicts it will remain around 30% even after the crisis has passed. As a result, it has made a lot of headlines for toying with the idea of leaving many of its stores shuttered.
All of this is a huge opportunity for Australian entrepreneurs and marketers. If you’ve been sitting on a brilliant idea for a business built on online retail but are concerned that the market just wasn’t ready for it, now is the time to strike. If you have an existing business but have been disappointed by online sales and failed to prioritise online marketplaces, now is the time to change tack. Chris Hales of online protein powder retailer Bare Blends reports huge sales through online marketplaces like Amazon: “There’s been a natural shift towards online shopping especially over the last decade, but we suspect this will be the greatest push towards e-commerce the market has ever seen. People of all ages are now relying on online shopping and deliveries which will forge habits for the future.”
Presuming you are still on board, the next question you may have is “Where should I start?”. And the short answer is “probably eBay”. eBay was one of the original global pioneers of e-commerce, alongside Amazon, and while its rival has soared over it in most international markets it remains stubbornly dominant in Australia. When Amazon Australia did launch, many predicted that eBay’s days at the top were numbered – the Sydney Morning Herald even ran a piece headlined “Does Amazon Australia’s Retail Launch Spell the End Of eBay?”, – but so far eBay has defied the doom-mongers.
According to disfold’s latest statistics, ebay.com.au still receives almost 70 million visits a month, compared to amazon.com.au’s distant second place with 22.5 million monthly visits. Australian eBay’s popularity is certainly driven by the sheer number of businesses trading on it, which currently amount to an enormous 40,000. Its international reach is also extremely valuable, not just because it allows Australian businesses the opportunity to trade overseas – exciting though that is – but because it also draws in a lot of consumers who are looking for goods overseas but are ready to be pleasantly surprised by something more homegrown and affordable. While eBay still offers the auction capability that propelled its early success, it now focuses more on “buy it now” fixed pricing.
eBay may still be the number one choice for the present, but entrepreneurs and marketers with an eye on the future will still often turn to Amazon Australia. Its brand recognition might lag behind that of eBay with Australian consumers, and it still doesn’t boast the number of products or sellers of its rival, but its total dominance globally means that it would be foolish to bet against it eventually achieving this supremacy here too. It also boasts ever-improving services for Australian businesses, with Amazon Australia Prime and Fulfilment by Amazon making it incredibly easy to ship products, the biggest challenge in this country. What’s more, its superb technical resources mean that its ability to support logistics challenges like inventory management is unsurpassed. This makes it unsurprising that sales automation experts Linnworks name it their number 1 international online marketplace.
The two international behemoths are out of the way, let’s now take a look at what Australia has to offer. The first one to consider is probably Catch. Despite only launching in 2017, catch.com.au has rapidly established itself as a dynamic online marketplace, helped by its pioneering of flash sales and special daily deals. Its success can be measured by the fact that last year Westfarmers snapped it up to operate alongside Target and Kmart. With almost 9 million visitors a month, it might not be a whale of a marketplace, but it’s no minnow either and can reach price-conscious consumers that its rivals can’t, across product categories including fashion, sports, tech, groceries, health and lifestyle.
MyDeal is another online marketplace which commands loyalty among many Australian businesses and consumers. Founded by Sean Senvirtne in 2012, it now hosts more than 1,000 sellers and half a million buyers. It is mostly but not exclusively geared towards larger and more difficult-to-ship items, such as sofas, mattresses and furniture, so if your business includes such items it may well be your first port of call in Australia. While there are signs that MyDeal may struggle with greater competition from Amazon, and that Senvirtne’s boast that “our model has no ceiling, we can continue to evolve and grow exponentially” may have been premature, there is no doubt that its unique approach still warrants attention. Not only can it handle all listings and presentations through its “storefronts”, but it even supports small businesses with loans to support new expansion and other opportunities.
This is far from an exhaustive list of the different marketplaces in Australia, and no doubt there will be fans of Kogan or Fishpond who will feel their favoured partner deserves to be mentioned here. In fact, it is this very competitiveness that makes online marketplaces in Australia so attractive right now, with favourable deals to retailers and consumers alike. Coupled with the opportunity provided by the Covid-19 crisis, there may never be a better time to turn your online shopping dream into a business reality. We hope this article will be your launchpad.
