SOAPBOX: 100% Customer Focus

27 September 2011

It’s hard not to open a business section today, on or offline, and read about the tipping-point of ecommerce in Australia. Much of the tone is negative, focusing on the threats posed to traditional retail models. Though I can only see major opportunities for bricks-and-clicks players both now and in the future.

We all know retail is going through one of its toughest periods in 50 years. Sales have been sliding since their peak in 2007, with this year's ABS report highlighting the weakest growth since 1962. So it’s understandable that the industry is feeling uncomfortable about the future.

According to the Productivity Commission’s recent 400-page report, it’s not so much about the GST threshold, or the current strong Australian dollar, as some point the finger at. They believe the decline is based on the industry lagging behind the rest of the world in productivity and use of the Internet.

So ecommerce is part of the solution, not the part of the problem.

Big retails claim for a level playing field is fair and reasonable. The government should investigate cost-effective ways to collect GST from major overseas retailers. For example, perhaps banks could collect the fee on overseas card transactions.

But even if the GST was universal, or the dollar weakened, that alone won’t be enough to save some. A genuine customer focus is the only competitive advantage in this market moving forward.

In the digital age, competing on price alone is almost impossible. Price is naturally very important, though with so many price comparison options, and competitor sites only clicks away, winning the new consumers business requires a more sophisticated approach.

To sell in the digital age, marketing has, thankfully, become more sophisticated. The gap between the marketing message and point of transaction has closed so much in recent times it’s virtually non-existent. An online store – whether it’s in customers’ browsers or on their smartphones – is as much a part of the marketing message today as any ad that runs on TV. Lee Clow, the creative director behind Apple’s most famous TV spots, once said, “I often tell people that the best ad we ever did was the Apple Store.”

A retailer’s online store – and the digital ecosystem in which it exists – are now marketers’ most powerful and persuasive marketing tools.

Persuasion today is driven by insights from data analytics that make the shopping journey more personalised and accessible. And through User Experience Design (UXD), which considers and optimises every part of the shopping journey from awareness to add-to-cart. Successful retailers are already driving new customer engagement using analytics to persuade customers in non-interruptive, more useful ways. Every message sent today can be subtle, targeted and helpful. More relevant marketing leads to a shorter consideration phase and higher conversion. All of this means more sales and greater brand affinity.

Generally speaking, the big brand retailers remain trusted institutions. This is a huge advantage when competing for customers, particularly in Australia as many smaller brands hungry for market share open their virtual doors. Experienced retailers greatest advantage is their ability to operate as multi-channel. They have a competitive advantage with their footprints and their immense knowledge of their customers: buying preferences and behaviours, seasonal trends, regional differences etc. More relevant, rewarding experiences are the solution.

Ultimately the advice to etailers, new or old, is focus on your customers, evolve your marketing practices and understand and appreciate new consumer behaviours. If you can do all this, you’ll be competing on experience not price, something that puts the power back in the marketer’s hands. And that has to be worth more than any GST differential.

Brian Vella
Managing Director, DTDigital

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