AUSTRALIAN online retailers are learning that the key to online sales success is to expand their brands offline into bricks and mortar.
Insightful statistics gained online make the decision a no-brainer.
“Australia is a backwater when it comes to online shopping,” dStore chief executive and local pioneer in online shopping Andrew Cooper says.
He says the main reasons are that high-street merchants have not gone online and because global online retailers put the relatively small Australian market at the end of their lists of markets targeted for expansion.
The Retail Doctor managing director Brian Walker says all the global retail studies show that to succeed online a retailer needs an offline presence too.
“There is much better penetration into the psyche of consumers when they can see it offline,” he says.
Australian Centre for Retail Studies research fellow Sean Sands has found in his local research that when a brand has been built online the next logical step is a physical presence.
Sands, joint author of the 2010 retail thought leadership report Value and Optimisation in Multichannel Retailing: A Cross-Generational Perspective, says “a consumer really values a retailer being in multiple channels”.
“One of the things that stops people buying online is that they are frightened that they can’t return online,” he says.
For that reason people often like to pick up from and see a bricks-and-mortar store in the high street.
This is the case for Digital Camera Warehouse, which finds that people buying online or through its call centre like to pick up from stores and shoppers in its three physical stores often like to shop online.
According to Walker, this is borne out by the conversion rates of online stores versus those offline.
Even the most popular websites convert only a small percentage of visitors to customers, the Apple store reporting a rate of 1 per cent and Best Buy in the US converting only 2.2 per cent of its monthly 25 million visitors.
In contrast to an online conversion rate average of 2 per cent to 5 per cent, a physical store can convert as many as one in five visitors through its doors.
This is because people prefer to research products online rather than buying them.
Digital Camera Warehouse director Lucinda Dalton says the online store’s premise was always to offer excellent service and contact with a human.
“First off, we always had our phone number and there always was somebody at the end of the phone,” she says.
“In the early stages it was always going to be a website and mail order.
“But then it became clear that the telephone was really important and people wanted some interaction.”
Dalton says the decision to open its stores (one each in NSW, Victoria and Queensland) was easy because, from its sales, the company knew where its customers were from.
“We can get data about where our customers are from the website,” she says. “The stores haven’t taken any sales away from our website.
“We were concerned that the physical stores would take away growth from the website but they have contributed to it. The story is similar for the Luggage Professionals, which started off as an online store with a showroom in Alexandria in Sydney.
Joint founder Michael Euvrard says the idea behind going offline was to extend the presence and credibility of the brand as the company found consumers wanted instore experience of the products. “One of the advantages of online is that you can find out this information,” he says. Depending which statistics you believe, about 65 per cent of internet users are researching online to buy goods, especially big-ticket items such as whitegoods or flat-screen TV sets.
What The Luggage Professionals found out through its website was in which suburbs people from Melbourne’s Toorak and Kew were looking for luggage. Euvrard says it is a really good way to identify what customers want and where they are and it became a “no-brainer” to open a store in Malvern to service those nearby suburbs.
Online retailer dStore is taking a different approach.
What it knows from online statistics is the shopping habits of its database of 550,000 Australians, 70 per cent of them women, and that one-third of global shoppers buy fashion online but only a fraction of those do so in Australia.
So the company is introducing a series of branded fashion outlets and revamping its website to sell fashion.
The idea is that the offline store will feed the online version and vice versa.
“We are convinced that the multi-channel approach is where it will end up,” Cooper says.
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