I thought it would be worth having a look at the growth rate of the top online retailers to see what is happening in the market.
In this article we will look at the top 5 and in the next post we will then see who are the other 5 online retailers who make up the top 10.
In the US Web retail sales make up 8% of total retail sales at $155 Billion whereas in Australia the figure is only 3%. This highlights the opportunity for retailers in Australia to take their offline business online as Australia will certainly close the gap over time as people become more comfortable with shopping online.
So who are the top 5 Australian online retailers?
In order of rank
1. DealsDirect.com.au
3. BigpondMusic.com.au
4. oo.com.au
5. OzSale.com.au
In the graphic below it shows the growth of these retailers over the last 12 months with growth ranging from just over 80% to over 2,800% with an average growth of 977%.
DealsDirect is the biggest online department store in Australia. Founders Paul Greenberg and Michael Rosenbaum regularly boast about their huge 40,000 square metre storage area, housing everything from bedspreads to kitchenware. The company has 120 employees. The site is immensely popular, recording the highest brand recall out of any Australian shopping site at 14%, according to Hitwise. Its biggest drawing card is its bargains, with the site constantly updating new products with low prices.
Australia has been hit with a wave of sites based on the successful US site Woot.com, with business selling only one product per day until sold out. Catch of the Day differs slightly by offering products from other sections of the site at once, but it is undoubtedly the most successful site of its kind operating in the country. Co-founded by Gabby Leibovich, the site is the fifth most popular shopping and classifieds site in the country. The company has also moved across into New Zealand, and is planning to launch spin off sites shortly. Catch of the Day is set to record $60 million in revenue for the current financial year
Apple has dominated the digital music market with iTunes for years, and globally is the most significant player. But BigPond Music has managed to overtake it as the most popular digital music site in Australia, according to the most recent Hitwise data. BigPond is certainly attractive. It offers a similar pricing structure to Apple, without the digital rights management issues. There are discounts for BigPond members and it is a fairly simple site to navigate. While Apple is surely getting the majority of sales, the amount of traffic going BigPond’s way indicates this is a growing business.
Oo, another department store, opened in 2005 and offers thousands of products in dozens of different categories. Once again, its message is simple – to offer the cheapest price possible. During 2008-09, the company recorded $30 million in revenue. While the company would not reveal too many details for recent figures, it said the last four months have seen average year-on-year growth of 38%, and that traffic has doubled in the same period.
This private online shopping club sells a range of items, but specifically focuses on fashion. It works by announcing a sale every morning which runs for a limited amount of time, usually a few days. Members are able to shop for the merchandise, which is usually heavily discounted, and even earn gift vouchers for every friend they have register who makes a purchase. Extremely popular among fashion fans, OzSale record revenue during 2008-09 of about $20 million.
The marketing to drive traffic to the online store is certainly key to driving sales. The success of Facebook and Twitter has seen hundreds of companies gain sales and customers through the use of fan pages, word of mouth, content marketing via blogs and customer service.
Computer manufacturer Dell now sells products through its Facebook store, with countless companies using Twitter as a customer service channel. Others use Facebook as a basis to connect with younger demographics, and offer exclusive deals and coupons.
Offline retailing still has its place but the clear trend is for businesses to start moving online – and fast.
Emerging and fast growing eCommerce technology platforms like Magento are also making it easier for companies to set up an online store in a matter of weeks and provide all the features of the web retailers mentioned in this article.
It is actually great to see that the traditional bricks and mortar brands have only one in the Top 5 with Telstra’s online music store “Big Pond Music”. The other major offline brands are starting to make their presence felt but there is certainly an opportunity for fresh start ups to make their mark on the Australian online retail scene.
Are you thinking about starting an online retail store?
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