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The International Technology Management Review, Vol. 6 (2017), No. 4, 149-157 E-tailing in Australia: A preliminary analysis of David Jones Jun Xu, Xiangzhu Gao and John Hammond Southern Cross University Southern Cross Drive, Bilinga, Queensland 4225, Australia Email: [email protected] Abstract Compared with other countries, especially China, United States, United Kingdom, Japan and Germany, Australia’s online retail fall behind in terms of both its sale and percentage contribution to the total retail. This paper analyses David Jones, which is typical of large department store chains, and Australian e-tailing environment as a case study to identify enablers for and obstacle to the advancement of e-tailing in Australia. Based on the analysis, the paper provides David Jones with recommendations on internal improvement, supply chain, customer relationship, and adoption of emerging technologies. Future research will be conducted to investigate if the recommendations are also applicable for other Australian retailers. Keywords: E-tailing, Click-and-Mortar, Omni-Channel, David Jones, Department Store, Australia. Founded in 1838, it has a long and established history 1. Introduction and brand, and is Australia’s oldest department store The Internet and emerging digital technologies have had and the oldest department store in the world still trading a profound impact on both consumers’ shopping under its original name.2,3 With rich retail experience, experience and behavior and retailers’ business David Jones has developed its e-tailing platforms, operations. Consumers can search for and compare supply networks, and loyal customer base. Currently, needed products or services easily, and can easily David Jones is a clicks-and-mortar e-tailer of more than switch to other retailers with a few mouse clicks. 43 stores in Australia and New Zealand, 2 warehouse Retailers can collect and analyse customer data online outlets and David Jones Online.2,4 It has been working for mass customization and personalization to improve on its omni-channel strategy in recent years. Currently customer relationships. The Internet also creates David Jones is trying to achieve 10% revenue from opportunities for new products or services, instant online sales, while many of its international competitors interaction, multimedia communication and ubiquitous have already achieved between 15% to 20% revenue access. In the upstream of industry chains, retailers can from online sales. collaborate and cooperate with their suppliers for This paper analyses David Jones as a clicks-and- procurement and logistics. Moreover, the Internet and mortar e-tailer and the Australian e-tailing environment telecommunication networks improve strategic alliance to identify enablers for and obstacle to the advancement of retailers with their partners, affiliates and other of e-tailing in Australia. Based on the analysis, the 1 stakeholders. According to Ecommerce Foundation, paper provides David Jones with recommendations for global B2C e-commerce sales have increased steadily future directions. since 2010. In the last five years, global B2C e- commerce growth were from 17.5% to 28.5%. 2. External Business Environment Available data shows that Australia’s growth was 14.6% in 2013 and 15.7% in 2015. 2.1. Retail environment in Australia In Australia, David Jones is an upmarket department In recent years, the retail landscape in Australia has store targeting mid-to-upper income customers. been changing dramatically, with uncertain economic Published by Atlantis Press Copyright: the authors 149 J. Xu et al. / E-tailing in Australia outlook, fluctuations of the Australian dollar, the Retailers need to acknowledge this and cater for their increasing popularity of specialty stores and brand- high shopping experience expectations and use both focused businesses, the disruption of the Internet on digital and non-digital assets and resources to influence retail, foreign competition and arrival of international and facilitate their decision making and purchases. retailers to Australian shores, and constantly changing In-store shopping experience and transactions would be consumer tastes and needs.5,6,7,8 Like other markets, more appealing if the value proposition of visiting the online retail has been growing significantly, although it store is good enough.9 Not all customers want to get a still only accounts for a small proportion of the total product quickly online, and many customers just want retail in Australia. Currently, annual online retail sale is to spend some time in the store for leisure and for A$20 billion, accounting for less than 7% of total retail socialization.15 in Australia.9 As a result of Australia’s geographic challenges and the existing logistic infrastructure, 2.2. Competition customers have to put up with slow shipping since there While the fierce competition in the industry could lead is limited domestic competition even though there exists to gains for consumers, the Internet reduces entry some international competition. In the UK or US, an barriers and differences among competitors. Anyone order could reach the customer’s doorstep in around 2 can set up an online business with a computer, an days, but it takes longer in Australia. Slow delivery and Internet connection, and a website, especially when high shipping costs have been an obstacle to e-tailing cloud computing becomes the norm. Smaller and newer operations in Australia. Australian retailers and their online businesses can compete with larger and more logistic and delivery partners need to improve their established players. However, it takes time and logistic and delivery practices with faster, cheaper and resources to develop quality retailers with well- more reliable services. Facing the challenges from established brands, supply networks, warehouse outlets, international e-tailers or marketplaces, (e.g. Amazon retail experience, customer base and loyalty. The and Alibaba) Australian e-tailers could focus on resources are most needed for small and medium populated cities, coastal areas and major/large towns as players especially pure online players. For example, the 10 the first step, and work on differentiated products and lack of a physical outlet and presence is a significant product bundlings and heavy and bulky items that weakness for pure online retailers. International leading 11 Amazon is not interested in shipping. Australian retailers such as Amazon and Dell have taken the lead in e-tailers should build and enhance consumer trust of the having physical stores/presence for such reasons as local market, offer in-store pickup and advice for online catering for customers who are not used to online orders. shopping, improving customer service or interaction Meanwhile it is also argued that the retail conditions with customers, and combining strengths of digital and 12 in Australia are challenging. There are too many non-digital channels. According to a recent CBA department stores in Australia, which have been 16 report, 18% of pure online retailers are planning to 6 struggling with profitability. In addition, due to a have physical outlets by early 2017. shrinking middle class, increasing debt, and cost of Currently less than 10% retail is done online,17 while living pressures Australian consumers have reduced 50.3% of Australians shopped online18 because of the their spending on such items as fashion, clothes and high penetration of the Internet and adoption of mobile 13,14 shoes. While the Australian economy has a positive devices. At this early stage of e-tailing, David Jones outlook, consumers may not be willing to keep on faces: paying high retail prices caused by over-inflated rents • traditional competition from domestic and and expensive labor costs as well as productivity and international retailers and brands, including Myer, 13 efficiency issues. Also, it is suggested that the most OZSales, Showpo, Dealsdirect, Kogan, dominant retail customer segment by 2020 will be ShoesofPrey, Missguided, Thesurfstitich, ASOS, millennials who very much embrace the digital world. Net-O-Pointer, Zara, Hugo Boss, Lacoste, Millennials may not shop frequently, but they do enjoy Burberry, and many others, the shopping experience, whether in store or online. • non-traditional competition from resource-rich or 9 Customers value shopping experiences in any channels. technology-enabled firms or firms with a large Published by Atlantis Press Copyright: the authors 150 J. Xu et al. / E-tailing in Australia user-base, including venture capital firms, David Jones and Myer has been the subject of telecommunication companies, ICT firms, online discussion in the retail industry in recent years. Some services firms, social media firms, online pro-merger arguments5,6,25,26,27,28 include: communities, online marketplaces, marketing and • Australian market cannot viably support multiple adverting networks, transportation and distribution large department stores and only one large chain firms, and others that could enter the B2C e-tailing can be financially viable. market. • Both David Jones and Myer have been struggling in recent years as a result of the changing retail 2.3. Upcoming Arrival of Amazon in Australia landscape. Amazon is establishing its warehouses in Australia to • The merger could strengthen the department store fulfil its bricks-and-mortar business in this country. It is chains and enable them to more effectively deal expected that Amazon can provide a wider range of with domestic and international