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Last year was a busy year for online retail and we saw many of the predictions for last year come to pass.
Content was indeed king in 2016 and we saw Google make algorithm changes that favoured good content. Mobile usage was up and we saw a rise in more interactive and video content. Customer service, omnichannel marketing and also delivery became the leading competitive advantages. All in all it was a busy year for online retailers.
What does 2017 have install? First, maybe we should cover off some of the technology that will bring in change but is not quite there yet.
Augmented Reality (AR) and Virtual Reality (VR) have been in the news and discussed widely. VR headsets like Google Cardboard were high on the gift list at Christmas. However, the consensus is that the technology is just not there yet. It needs to improve in speed and quality to get to a point where it will have an impact in online retail. Watch this space for 18 months to two years and see how the technology improves.
Delivery by drones was also one of the hype concepts that invaded social media and the news. But again there are still lots of technical issues and regulatory issues before we see a drone at the front door.
There are other up and coming disrupters that we will see and hear more about. One of those likely to impact retail in general is Amazon Go. This is a whole new instore experience where there is no checkout and no people. By taking a product from the shelf Amazon Go will remember what you took and who took it. When you finish selecting your products you just leave the store and everything else is taken care of, as if by magic (well, Amazon).
So what will we see impact online retail in 2017?
Mobile has now become the major device used by visitors on most online retail websites for B2C. So we can expect to see website design and user experience really optimise for mobile before desktop from 2017. That will mean simpler and cleaner designs with easy, device-friendly navigation.
Commencing July 2017 international retailers selling online into Australia will need to start to collect GST. This will impact larger international online retailers’ more than small businesses. The change could see some international retailers pull out due to the costs to their business and would give the Australian online retailers a competitive edge. Legislation isn’t in place yet and it is unclear how earnings and payments would be monitored and collected so let’s wait and see.
Many analysts believe that the introduction of GST on international online sales will stimulate Amazon to start a direct operation in Australia. This could have a profound impact on many of the large online retailers in Australia. The general opinion is that Amazon will focus on general merchandise initially such as electronics and toys. This would impact retailers directly and possibly start a pricing competitive battle.
Based on eBay’s success, analysts are predicting that Amazon could grow to a $3 – $4 billion business in Australia, with over 10 per cent of online sales and over 1 per cent of retail.
One of Amazon’s biggest advantages is their supply chain. Amazon not only ships products directly from their warehouse to consumers but they have made those logistics incredibly streamlined and quick. This means that they have much more control than other suppliers and more efficient deliveries. That has been a long lost opportunity for Australian retailers in general. This year will see local businesses move to improve the supply chain to enable more accurate stock management and faster delivery. Some businesses may take advantage of Amazon’s logistics and sell their products through that market, should an operation open in Australia.
As larger organisations struggle to be competitive due to rising costs and growing competition, small businesses can fill the void. Many people still want to buy locally and that could also be stimulated by the change in international GST for online sales.
Small businesses can get started in online retail at a relatively low cost compared to a bricks and mortar store or a large business with heavy overheads. They can also provide better and more attentive customer service. The online landscape is opening up more and more opportunities for niche businesses – you can easily carve out a nice niche without a lot of effort. Also, you may not need to compete on price because many people are looking for a quality provider, a positive shopping experience and individual attention.
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