While the naysayers of online retailing were busy courting the media during Christmas 2010, fashion e-tailers were quietly getting on with business. In addition to the extra publicity the Retail Coalition's campaign against the federal government's $1000 tax-free threshold on overseas purchases generated for them, e-tailers were clocking up sales 24 hours a day and bypassing eastern Australia's plague of wet weather and natural disasters.
But perhaps the biggest benefit enjoyed online was the capacity to court internet users across the globe, a population that numbered 1.6 billion people at the close of 2010, according to UN agency the International Telecommunication Union. Here, three e-tailers give Ragtrader a run-down of how Australian online fashion businesses can target international shoppers and the benefits that can ensue.
Target markets
Ten years on from its launch in 2001 and men's underwear and swimwear brand AussieBum sells online in 14 languages. The company spends more time shipping product offshore than it does distributing it within Australia, with local orders representing 15 per cent of overall sales. AussieBum.com's top markets beyond Australia are North America, the UK, France and Germany, and 60 per cent of the company's sales are processed online.
AussieBum founder Sean Ashby's advice to anyone considering opening an online fashion boutique geared to the international consumer is to keep traditional Western markets front of mind.
“If you're going to do this and you're going to do it properly, the UK and North America have to be in your top markets,” Ashby says. “If not, you'll find the costs associated with marketing and promoting, it's going to be too difficult to survive.”
Ashby says The Netherlands is a good testing ground for e-tailers keen to see if they are catering successfully to the needs of the European market, and acknowledges China and India are up-and-comers too.
“Many people who are buying fashion in China are not buying fashion that's made in China,” he says. “They're buying product that is unique and maybe not available in China in a retail capacity.”
Former co-owner of online store Frockaholics.com and now master of high-end Australian online boutique The-Dreamery.com, Sarah Pavilliard, is more convinced of Asia's potential. Having launched her latest venture in October 2010, Pavilliard is currently focusing on building her cash flow and market penetration in Australia. Her long-term strategy, however, is to target Asian spenders.
“There's just burgeoning markets,” she explains. “You have places like Japan and Korea where there's a very high usage of the internet and they're very well developed countries; they're on par with Australia. There are less developed countries that have populations that have increasingly got discretionary money to spend and there's an interest in Australia and Australian products.
“One of the other reasons is because, certainly in south Asia, there's better parity with our seasonality so that's an advantage. In the long term, it's really because we have amazing brands, produce amazing clothing and there's not much penetration into Asia yet.”
Co-owners of StylePalace.com.au, Darlene and Peter Gianoli, also offer Australian-only brands such as Camilla, Bec & Bridge and Samantha Wills via their website. Two and half years after going live, international sales have grown to represent 25 per cent of the website's sales, with high traffic coming from the US and Singapore.
“Obviously we want to build the international but building an online following is almost as expensive as building a following in bricks and mortar,” Peter Gianoli says. “You can waste a lot of money advertising online internationally and not get a result because there's so many sources out there.
“We're being quite strategic in the way we do it – Facebook and Google are arguably our best sources. We can turn countries on and off as we wish and we kind of do that. We give them bursts and rests and see what uptake we get and then go again. Our plan is to incrementally build those regions.”
Barriers to entry
Sizing, currency, shipping costs, branding in unfamiliar markets and copycat sites can all be a problem when selling internationally online, but they're all problems that can be overcome.
Pavilliard is not concerned about sizing differences between Asia and Australia, for example.
“A lot of people make the comment that a lot of Asian women are petite,” she says. “I do think that will be certainly something that needs to be grappled with, but as with actually entering the market initially, it's about taking it slowly and getting some information. Then I'll be able to feed that back to brands.”
As for Ashby, he says less than three per cent of AussieBum's online sales are returned due to sizing or other problems. Similarly, currency differences do little to bother him.
“That is something that's a part of the architecture of the website, where it identifies the day's trade in currency. Also, because we trade in the Australian dollar, it does fluctuate our prices in relation to the market but allows us to know that if we are selling a product for $20, we are selling it for $20.”
One problem Ashby has endured is copycat e-commerce sites, including one out of the US.
“It's funny to see that they think that it's really just a case of looking at somebody's website and going 'oh, we've only got to do this and this'. They last only about six or 12 months and they ultimately fail and the reason for that is e-commerce is actually I reckon 10 times harder than setting up a retail store.”
Discounting wars also inhabit the e-space.
“We've got $20 vouchers flying all over the place in cyberspace,” Darlene Gianoli says. “Girls will find out who's got the vouchers, who's got the coupon codes, who's got the best price, then they'll shop around.”
While Pavilliard imagines the trend for free international shipping is going to intensify, perhaps to small e-tailers’ detriment, Ashby points out the competitive advantage that Australia has on the shipping front based on our need to air freight everything rather than deliver it by road.
“Australia is the best place in the world to [dispatch] from. We can have a customer order from America and we can send it just economy shipping and they will have it in about four days. It will cost us about $4-$5. If the same person was to order a product on e-commerce in their own country, it can take up to two weeks.”
Finally, Pavilliard says sites such as hers that are selling high-end goods to brand-conscious markets such as Asia need to be prepared to spend money on marketing.
“A considerable investment will need to be in PR in those countries that are being targeted to really increase the awareness of Australian labels. It can be done,” she says.
Other components of the marketing mix that need to be budgeted for are search engine marketing and social media campaigns.
Resources and ready-made lessons
Austrade, international trade journals and advanced Google searching techniques are all resources Pavilliard used when working on the The-Dreamery.com's set-up.
“You can find a developer that you feel comfortable with and give them your specification and they'll deliver a website to those specifications,” she says. “But the problem is when you're starting out, you don't know what you don't know.
“What I actually did for The-Dreamery.com was I researched a whole range of retail systems that I could then go to a developer with, have a bespoke front of my website developed and went with a solution that would allow me to grow. I didn't want a system that would only let me have, for example, 500 products on the website.”
Pavilliard's background as a systems engineer meant she was comfortable searching through retail systems information herself. For those not so skilled in the area she recommends two different options.
“You can find a web consultant. I think there's really big benefits [in doing that] if you have no technical or programming or systems background. Then the other way is just getting online and searching and comparing. Look at what they offer and even as simple as putting it all into a spreadsheet: 'does system x do thing y?' Down to that level.”
Her other bit of advice is to get on the ground in any markets you are contemplating selling to. “It's about understanding what's already in the market and what's working and then tailoring the brand offering to that.”
Ashby agrees: “The most important thing is you should always respect another country's culture. It sounds very easy but for example the way you market yourself, there's a very fine line. Australia's one of the most conservative countries in the world, which I didn't realise until I started marketing overseas. It showed me that for us to become dominant, we had to do things that Australian people would say, 'why are you doing that?'”
Important too, Ashby says, is for local e-tailers to celebrate their Australian roots.
“I find it so silly that many try and behave or try to look like a global brand. That's probably the worst thing they can do. If they recognise and respect their own culture and market in that position, they will find that there will be a huge audience for them.”
Ashby's final word of advice: don't pay too much attention to e-commerce experts.
“A lot of these people who are out there shouting about how I should have done it this way or that way, they're actually only talking about a moment in time. It's not necessarily where things are going to be in even another 12 months' time.”