Experian Hitwise general manager of consumer insights and targeting David Chinn crunches a year's worth of data to bring you the best of the best in online retail.
Now that the Christmas and New Year holiday season is behind us, retailers are wondering how to capitalise on the holiday momentum to continue sales in 2015.
Experian analysed data to compare the performance of local and international retailers and to identify opportunities for growth.
We found local brands have responded to the challenge set by incoming internationals that threatened to steal market share.
These local retailers have successfully built momentum by investing in e-commerce platforms to meet rising customer expectations.
With continued investment in e-commerce and the integration of the customer experience in-store and online, these brands will see continued growth this year.
In recent years, dozens of international bricks and mortar and pure-play brands have invested in the Australian market.
This mix of local and international brands brings greater competition and choice, creating a more dynamic and competitive retail landscape than 12 months ago.
In fact, Experian data shows the top 39 most visited websites in the ‘Apparel and Accessories’ category experienced an average growth of 21 per cent last year (Oct ’13 compared to Oct ’14).
The introduction of international retailers to the market has generated more interest and excitement in retail which is having a flow on effect for the whole industry.
We can see that while local retailers have successfully responded to the international disruption, international retailers have not fared so well.
Only two international players managed to secure a spot in Experian’s list of the top 10 most visited websites last year (in the category of ‘Apparel and Accessories’, October 2014) .
Overall, local retailers also experienced a 23 per cent increase in visits to websites, outperforming international retailers by six per cent last year (in the category of ‘Apparel and Accessories’, Oct ’13 to Oct ‘14).
This is also reflected in research by Roy Morgan that showed 64 per cent of Australians shopping online were using websites of Australian based retailers.
While the local market has been dominated by international retailers such as ASOS, we’re now seeing home-grown players expand more quickly.
The Iconic is a local success story benefiting from an ongoing commitment to great customer service as well as innovation and efficiency in e-commerce.
The Iconic experienced a 56 per cent increase in the number of visits it received to its website last year (Oct ’13 to Oct ’14) whereas, one of its main competitors, ASOS, only experienced an increase of three per cent during the same time period.
This is significantly less growth than it experienced last year (56 per cent in 2013).
These results speak to the increasingly competitive nature of Australian retail and the need for even the most successful brands to continually innovate.
The affordable fashion sector is one which is experiencing a period of significant change and transition that will continue this year.
International retailers such as Top Shop, Zara and H&M are established overseas and the bricks and mortar stores have been hugely successful in Australia.
However, as H&M and Zara don’t yet offer online shopping in this market, they have some ground to make up online.
We’re likely to see a real shake up of the sector as international retailers compete with each other, local bricks and mortar retailers, steadily growing pure-play retailers and new on-trend brands.
Two examples of on-trend brands which pose a major threat to more established brands are Popcherry and Rosewholesale.com.
They are in direct competition with international brands as well as local players like Ally fashion and SUPRÉ.
Popcherry, a local e-tailer, was the fastest mover in the category of ‘Apparel and Accessories’ last year, experiencing a huge 1,480 per cent increase in visits to its website (Oct ’13 to Oct ’14).
Popcherry was established by two Australian fashionistas, dissatisfied with international retailers that didn’t offer affordable shipping to Australia.
The site is popular for its extensive range of affordable, on-trend fashion and appeals to 18-24 year old females.
Rosewholesale.com is an international pure-play brand offering affordable fashion and a low flat rate shipping cost to Australia.
It experienced a 1,374 per cent increase in visits to its website last year (Oct ’13 to Oct ’14).
Interestingly, this site appeals to an older audience, predominantly older women who are conscious of their budget.
We can already see the impact these e-tailers have had on the affordable fashion sector. Brands such as Ally Fashion and SUPRÉ experienced a significant decline in online traffic last year (SUPRÉ – 40 per cent, Ally fashion – 17 per cent, Oct ’13 to Oct ‘14).
To have a significant impact on Australia’s online retail landscape, and to stay competitive, international retailers need to have an online offering and pair this with a great customer experience.
With H&M recently announcing it would launch eight new online markets, things will definitely be shaken up over the coming months.
With each passing year customer demands become more specific, their expectations rise and they become harder to impress.
Retailers that can understand these changes in customers’ expectations are ultimately better equipped to deliver.
This year, we believe Australians will demand faster, more secure deliveries and a more enjoyable experience, in store, online and through social media.
Retailers need to get creative and continue to innovate their services in order to deliver on these expectations.