Australian Retail Adoption Plans for Online Advertising and E-tailing

Transcription

1 Australian Retail Adoption Plans for Online Advertising and E-tailing AIMIA RESEARCH FINDINGS MAY 2012 RESEARCH CONDUCTED BETWEEN SEPTEMBER 2011 AND JAN 2012 SPONSORS:

2 Foreword On behalf of AIMIA, it s my pleasure to be involved in the publishing of our second independent research report in an ongoing series: Australian Retail Adoption Plans for Online Media and E-tailing. There is much published in Australia about the growing adoption of e-tailing by consumers and the impact of international e-tail competition, however, this is not the focus of this report. Our research looks at tracking what Australian retailers themselves are doing about adopting and evolving their omni-channel offering. The research aims to give retailers and our members an independent benchmark by which to assess their own business priorities and opportunities in this space. This year s research shows, as expected, growing adoption rates across the board for interactive, digital and e-tail services as retailers reorganise resources to focus more attention on the digital consumer, but also highlights the internal resourcing and cultural barriers that are hampering more rapid successful implementation. The stark reality for the industry is there are precious few senior, experienced client side personnel in Australia meaning most retail organisations are learning as they go. This places Australian retailers at a disadvantage, when experienced international retailers enter Australia either directly through stores or simply through online marketing to Australian audiences. I d like to thank the people within AIMIA, the ACRS and our sponsor organisations for the work that has been done to bring this important research work to fruition in Robert Wong Chair AIMIA Retail Industry Group CEO CC Media inc Network Australian Retail Adoption Plans for Online Advertising and E-tailing 2012 Page 2

3 Executive summary The current state of online retailing and marketing in Australia 75% of all retailers (large and small) now have an online presence and 43% are selling online. 88% are advertising online (even without a website). Retailers are using a wider variety of digital channels/tools with , social, video and mobile growing rapidly over the last year. Almost a third of retailers are leveraging social media, but there is still uncertainty as to how to extract maximum value from it. Mobile e-tailing is embryonic for most, perceived as expensive but having huge growth potential. Retailers are using their TV resources to create content not just ads. SEO, and SEM are the most popular forms of online promotional strategies. The current barriers to online channel entry/growth Internal expertise, organisational culture, systems integration, and supply chain management continue to be the biggest barriers to growth. Hard to find experienced senior operation staff who know e-tailing (not just technology). Consumers are not the problem (they get it and want it). Retailer digital plans and goals for 2013 and beyond 86% of retailers will increase their online budgets to further focus on driving sales (through both physical and online stores) and building multichannel operational capabilities. Retailers are reliant on a wide number of external partners to set & implement strategies. Most Australian retailers have accepted e-tailing is not going away. Australian Retail Adoption Plans for Online Advertising and E-tailing 2012 Page 3

4 Contents Research overview Section1: The current state of online retailing and marketing Section 2: The perceived barriers to online channel growth Section 3: Retailers digital plans and goals for 2013 & beyond Australian Retail Adoption Plans for Online Advertising and E-tailing 2012 Page 4

5 Research overview To understand online retailing and marketing in Australia, AIMIA engaged Dr Sean Sands from Monash University s The Australian Centre For Retail Studies. Qualitative research was first performed, consisting of 20 interviews with large Australian retailers. This was followed by an online survey of 169 Australian retailers, and compared to a similar 2010 survey of 128 Australian retailers Respondents represented a cross section of retailers in terms of: Size (revenue, number of stores) Retail sector Respondent division or department Structure (Pure online retailers, bricks & clicks, pure bricks & mortar) Franchises versus company owned Australian Retail Adoption Plans for Online Advertising and E-tailing 2012 Page 5

6 SECTION 1 The current state of online retailing in Australia It has become more of a priority for all retailers to become active in the online and digital space. Australia has, for a long time, hidden behind the fact that we re so far away from everything... Now with the growth of e-commerce, and the fact that there s so many more companies shipping to Australia from overseas, we can t hide behind that anymore. There s no boundaries for Australian retailers, we have to embrace it. EYEWEAR RETAILER Australian Retail Adoption Plans for Online Advertising and E-tailing 2012 Page 6

7 Channel adoption 75% of retailers now have an online store presence The vast majority of retailers with multiple stores have an online presence (78%). This means they have a consistent online website which may have online purchasing capability. 75% 78% 46% Even small single stores are putting more effort towards online, with 46% having an online presence. All Multiple Single Retailers who have an online presence Almost a third of retailers are leveraging social media, but there is still uncertainty as to how to extract maximum value from it. Retailers are beginning to understand the nature of social media and its business value. Social media is being used to engage customers and gather insights, but not necessarily as a direct sales channel. It is used primarily for engagement and tracking brand conversations. Some retailers fear losing control of their reputation because they don t control the messages. Facebook is the most dominant social network for retailers. Social media is a work in progress. Australian Retail Adoption Plans for Online Advertising and E-tailing 2012 Page 7

8 Retailers are exploring a range of digital channels to reach customers Website 55% 73% Physical store (strip) 69% 83% Physical store (mall) 50% 54% Online - offer 47% Social networking sites 43% Catalogue - paper based 33% 41% Online - video content 31% Online catalogue Mobile (iphone app, SMS) Shopping comparison sites 30% 31% 26% 19% 20% Online - coupons 19% Call centres 19% 18% Online - consumer review sites 19% Self-service or information kiosks 6% 10% 2011/12 Mail order 9% 18% 2010 Clearly, physical stores are still important for retailers, but an increasing array of go to market channels are being explored. For online channels, website is still the most common, but , social networks, online catalogues, video and mobile are on the rise. Australian Retail Adoption Plans for Online Advertising and E-tailing 2012 Page 8

9 Smart mobile is being used to make customer interactions easier Mobile is seen as a key tool being used by consumers in-store, for pre-purchase research and location-based information. Retailers recognise the importance of using mobile micro-sites or apps to enable customers to easily view and access their web content, but not all have detailed strategies in this area. They see mobile as being able to integrate the online channel further social media, online, couponing, location-based information, catalogues. They believe the link between mobile and social media is important as consumers also access social media from their smart phone, but do not have highly developed strategies. Retailers perceive the cost of creating mobile micro sites as an inhibitor. Video is used to bring content, products and processes to life Fashion, electronics and hardware categories appear to be strongest in using video, where they can leverage advertising resources to create content. Video content is seen as important by most retailers. Australian Retail Adoption Plans for Online Advertising and E-tailing 2012 Page 9

10 Multichannel is evolving rapidly Many of Australia s larger retailers moving to e-tail enablement across their product range. David Jones announced in April 2012, that they are embarking on a major project to be able to photograph up to 90,000 products and make them available as part of their E-tail strategy. Australian Retail Adoption Plans for Online Advertising and E-tailing 2012 Page 10

11 Use of online throughout the Consumer Decision Making Process Online capabilities are changing as capability increases There are varying degrees of online capability amongst retailers, with a spectrum from: Informational Retailers offer the online channel for information, such as store locators and product information. Retailers at this stage of adoption tend to either see transactional capabilities as too difficult or as sufficient for their customers, i.e. their product categories do not lend themselves to online transactions. These retailers tend to focus on rudimentary objectives and measures for online, such as website traffic numbers. Fully integrated and transactional These retailers strive to manage integrated multiple channels to deliver seamless information, education, purchase, support, and even entertainment across platforms. These retailers are beginning to look at conversion, contributing brand metrics and ROI. The primary role of a retailer s website is advertising, but other uses are developing as capability increases Loyalty or repeat purchase % Sample percentage who have implemented Feedback % Importance mean rating (1 7) After-sales service % Transacting % Advertising % Online advertising was deemed the most important and had the highest penetration at 88%. The way advertising is presented on the website can vary from simple broad sale messages to full product and price display. After-sales service and transacting are important but show lower implementations due to the organisational complexity in offering them. Loyalty and feedback are deemed important, but most functionality is rudimentary, e.g. few link loyalty schemes to online behaviour. Australian Retail Adoption Plans for Online Advertising and E-tailing 2012 Page 11

12 SEO, marketing & SEM are still the most popular media for advertising & promotion Mean rating of popular media usage Search engine optimisation marketing Search engine marketing Traditional media Online catalogues Social networking widgets Mobile marketing Performance based online media 4.4 Syndicated content 4.3 Banner advertising Online video advertising Price comparison websites Syndicated content Ad networks Affiliate programmes Online couponing / Traditional media still lags behind online and interactive media. The top 3 digital media are: Search engine optimisation marketing Search engine marketing The least popular media are: Online coupons Affiliate programs Ad networks Australian Retail Adoption Plans for Online Advertising and E-tailing 2012 Page 12

13 On average 43% of retailers are selling online, but retailers with stores are rapidly embracing online selling 73% 71% 42% 38% 43% 28% 25% 1 store 2-10 stores stores stores stores 100+ stores All Retailers who sell online Small single retailers are resource and market constrained. Stores with stores are embracing online more rapidly. This is because they have resource capacity and realise online selling offers them an increased footprint. Larger stores 100+ are slower and are often impeded by franchise and organisational momentum. Australian Retail Adoption Plans for Online Advertising and E-tailing 2012 Page 13

14 Customer, Sales and Revenue outcomes Online stores are becoming top performing stores Many multichannel retailers commented that their online store is fast becoming a top performing store. Leading multichannel retailers measure the online store relative to physical stores. Some online stores have developed into their own profit centres, therefore reinvesting based on profit. Online s share of revenue can be high for smaller retailers 1 store 2-30 stores stores 100+ stores 44% 40% 30% 11% 17% 50% 22% 20% 19% 32% 0% 0% 0% 20% 14% 10% 0% 20% 0% 0% 0% 0% 7% 10% 33% Less than 3% 3-5% 5-10% 10-50% 50-99% 100% I don t know In the majority of cases retailers confirm that e-tail sales are less than 5%. Some smaller retailers are recording a much higher e-tail sales share. 33% of retailers with 100+ stores do not know how much online sales contribute to their total sales revenue, which suggests it is not significant. One in five retailers say 60-99% of their customers are active online shoppers 31% 2% 20% 9% 10% 7% 17% 4% I don t know 100% 60-99% 40-60% 20-60% 10-20% Less than None 10% Retailers have said significant numbers of their customer base are active online shoppers. 20% of retailers surveyed said that 60%-99% of their customers are active online shoppers. Only 4% of retailers believe none of their customers shop online. 31% of the sample did not know which indicates many retailers are not actively considering this metric. Australian Retail Adoption Plans for Online Advertising and E-tailing 2012 Page 14

15 SECTION 2 The barriers & enablers to growth online In the next months, the online landscape is going to be significantly different to what it looks like today. At the moment, there are not that many big brands trading online, and I guess the consumer is probably thinking, Why isn t X brand or Y brand online? It s exciting that some major players are now making the decision to venture into the online space... it s going to give consumers more confidence to shop online. FOOD RETAILER Australian Retail Adoption Plans for Online Advertising and E-tailing 2012 Page 15

16 Barriers Retailer barriers focus on systems, supply chain and people Mean rating of current retail systems Integration of systems with existing business model 5.0 Changes to supply chain management Internal skill sets in e-commerce Physical distribution of goods Organisational resistance to change Franchisee pressure Fulfillment management & customer experience Buying products that are conducive to online selling Warranty & returns management Measuring ROI Management support Other 5.9 Systems integration and supply chain management are the most common barriers. While several retailers are moving towards dedicated internal resources, there is still a lack of sufficient expertise. Customer barriers are relatively low Mean rating of customer barriers Shopping online Payment concerns Security of personal information Spam concerns Australian retailers believe customers are fairly comfortable with buying online. Shipping costs were nominated as the biggest barriers to customers shopping online (but this is more reflective of Australian retailer competitiveness, rather than a consumer barrier). Australian Retail Adoption Plans for Online Advertising and E-tailing 2012 Page 16

17 Strategy development Overall, organisations are placing greater priority on the online channel Retailers are placing greater priority on: Resources: especially people some retailers are moving towards creating a multichannel division. However, there are significant problems in securing experienced skilled staff for online e-tailing. Systems: mainly backend and support infrastructure. Retailers are thinking more deeply about multichannel integration, as opposed to stand alone e-tail businesses. Budgets are being allocated, but this tended to be tied to short term marketing/ sales performance. Organisational structure is evolving The composition of the digital/ online team within an organisation differed across retailers. Savvy retailers were looking to recruit multichannel directors/ managers and also attempting to create cross-functional teams. Sometimes a stand alone unit had been created within the organisation, with the common reporting line to general management. Often the structure remained within the marketing team. Support typically still sits within marketing, but in some instances it lies with senior management. Australian Retail Adoption Plans for Online Advertising and E-tailing 2012 Page 17

18 Online strategy development is shifting away from the Marketing Department Within the marketing department 36% 51% Across multiple departments Within a standalone business unit 22% 20% 20% 27% There is no organised online operation/function Other 3% 0% 14% 8% 2011/ The Marketing Department is still the most common area from which the online strategy is developed, however it is substantially lower than in Slightly more retailers are managing the online strategy across multiple departments. Although strategy is driven primarily by senior management, an abundance of external resources are being used Senior management 67% 70% Agencies Technical support 36% 37% 31% 38% Other internal staff External industry contacts e-tailing specialists 21% 24% 20% 30% 38% We do not obtain support External industry contacts 5% 14% 13% 15% External retailers Senior consultants 10% 9% 9% 13% Industry bodies Other 3% 2% 2% 2% 2011/ Only 14% of retailers do not engage external strategy support. 36% of retailers rely on agencies. 31% use external technical support. Consultants play a minor role, at 9%. Australian Retail Adoption Plans for Online Advertising and E-tailing 2012 Page 18

19 Smaller retailers are prioritising online spend 65% 5% 6% 13% 0% 4% 9% 22% 6% 0% 17% 34% 17% 17% 29% 20% 15% 37% 0% 17% 17% 33% 26% 0% 8% I don t know None Up to 10% 10 to 20% More than 20% Online retailing % share of total marketing budget Total 1 store 2-30 stores stores 100+ stores 100+ stores stores 2-30 stores 1 store Total Budget does not sit within marketing 25% 23% 9% 22% 16% Over 20% of larger chains have their online budget sit outside of Marketing. 29% of retailers with 100+ stores dedicate up to 10% of their marketing budget to online. 65% of retailers with stores dedicate up to 10% of their marketing budget. Over 30% of small chains and single stores dedicate over 10% of their marketing budget to online. Australian Retail Adoption Plans for Online Advertising and E-tailing 2012 Page 19

20 SECTION 3 Retailers plans for The online channel is extremely important number one. It has become a new revenue channel for the business; 12 months ago we weren t trading online. It s become a profit centre in its own right. We are seeing it as one of the channels that is going to give us significant growth over the next months. ELECTONICS RETAILER Australian Retail Adoption Plans for Online Advertising and E-tailing 2012 Page 20

21 Budgets 83% of retailers will spend more on online Survey on budget allocation It will decrease 3% It will remain the same 14% It will increase 83% Retailers expect the share of advertising budget allocated to online activities will increase over the next 3 years. There is clear evidence from this study that retailers will be spending more on capital development as well as marketing. marketing, SEO and online catalogues are the most important tools for advertising and promotion in 2012/3 marketing SEO 60% 56% 57% 67% Online catalogues 37% 47% Banner advertising Social networking widgets Online coupons 28% 24% 28% 24% 19% Mobile marketing Online video content 18% 16% 17% SEM 17% 36% Ad networks 2% 12 % Click-through advertising 4% 9% Syndicated content 3% 9% 2011/12 Affiliate programmes 3% 12% 2010 Retailers were asked to rate the three most important digital tools for the next 12 months. The top 3 are: But there is also clear evidence that retailers are increasing spend across a variety of online advertising vehicles (e.g. online coupons). Marketing SEO Online catalogues Australian Retail Adoption Plans for Online Advertising and E-tailing 2012 Page 21

22 Goals and strategies Advertising and enabling e-tailing are key focus areas Main focus areas for online in the next 12 months Enable online selling 31% 41% Advertising & promotion None of these areas Increasing retail brand awareness 4% 16% 16% 25% 45% Optimise the mix/efficiency of advertising options Encourage post-purchase interaction 7% 4% 10% 2011/ The main focus areas for online for the next 12 months are: Enabling online selling Advertising and promotion Increasing retail brand awareness online Retailers will focus on online sales and leveraging insights Retailers are focused on increasing sales through the online channel: As it enables an extended footprint. To retain some of the online dollars spent with overseas online retailers. To convert online customers into purchasers. Many retailers plan to gain and leverage customer insights: By leveraging their online/social community using survey tools and social media posts. Using consumer reviews. Integrating CRM programs to improve offerings and communication. Australian Retail Adoption Plans for Online Advertising and E-tailing 2012 Page 22

23 Driving traffic to both physical and online stores are the most important online sales strategies The most important online advertising strategies in the next 12 months Driving traffic to website 88% 88% Driving traffic to physical stores 69% 85% Building a customer database for marketing 44% 62% Building an e-commerce capable website 41% 56% Establishing a dedicated internal online division 23% 15% 2011/12 Other 10% 19% 2010 Respondents were asked to rate the three most important online advertising strategies for enabling online selling for their organisation in the next 12 months. As in 2010, the most important strategies in 2012 were: Driving traffic to stores Traffic to websites Building customer databases 18% of retailers believe group buying will impact them in 2012 Perception of buying groups impact on retailing for the year ahead 18% Yes, some effect 41% 41% No, no effect Don t know Respondents were asked if they perceived buying groups as having an impact on retailing for the year ahead. Only 18% believed there would be an impact, whilst 41% were unsure. Australian Retail Adoption Plans for Online Advertising and E-tailing 2012 Page 23

24 The reality is, businesses that don t embrace online in the next months won t have a business in the long run. Executives in most organisations are now realising that they need to be online. And it s not good enough just to have a presence nowadays... Consumers out there have an expectation, and unless you are serious about it, they re going to work out pretty quickly that you re not serious about the channel and they won t engage with you. Ultimately that will affect your bricks and mortar business. ELECTONICS RETAILER Australian Retail Adoption Plans for Online Advertising and E-tailing 2012 Page 24

25 Sponsors & acknowledgements Sponsors reactive.com Reactive is a digital agency specialising in strategy, creative, technology and marketing with 100 staff across our five offices in Melbourne, Sydney, London, Auckland and New York. Our reputation is one of excellence and innovation in the online channel evidenced not only by the quality of work that we do but also by the results we achieve for our clients. Over the past fifteen years, we have designed, built and marketed ecommerce Web sites for some of Australia and the world s most prestigious retail brands, such as Rip Curl, General Pants Co, British Airways, Bras N Things, GAZMAN, Crumpler, Berlei, Emu Australia and Tesco. incnetwork.com.au/ The inc Network is the largest digital catalogue distribution network in Australia, reaching in excess of 4 million Australians every monthacross multiple digital devices including pc, mobile and tablets. We work with Australia s largest store retailers to reach online consumers whether they are in their home, in transit or at work, to drive both off and online sales. inc is part of CC Media and the APN News Media Limited. The Australian Centre for Retail Studies (ACRS) is an independent retail and consumer research centre based within the Department of Marketing in the Faculty of Business and Economics at Monash University, Caulfield Campus. The ACRS provides a range of research and consulting services to the private sector and government clients, with a particular emphasis on retail and consumer research. Research priorities are developed in consultation with industry clients and promote research-based knowledge and thought leadership. Acknowledgements AIMIA would like to acknowledge the AIMIA Victoria committee, the AIMIA Retail Industry Group and Janine Wiedermann (report editor) and Dr Sean Sands from the ACRS in combining to produce this report. If you would like more information regarding this report, to inquire about sponsorship of the 2013 report please contact: Robert Wong AIMIA Retail Industry Group Chair robertw@ccmedia.com.au or Australian Retail Adoption Plans for Online Advertising and E-tailing 2012 Page 25