Michael Knapp: “Our website is our key sales person. It operates 24 hours a day, seven days a week. It doesn't complain; all it needs is electricity and internet. When we were starting the business we weren't looking to start an online shoe retailer, we were looking to start a business that people would want to talk about. We found this product that we thought, 'hey, this is really unique, this is something that people will want to talk about and discuss and tell their friends about and it'll be really easy for us to get the word out'. We really picked the product idea basically because we thought it was unique.
One of the key learnings for us is that if you try to sell other people's brands, particularly foreign brands that you don't really control, it quickly becomes a race to the bottom in terms of price on the internet. If you're able to construct your own brand, your own experience, it's much easier to add a lot more value that customers are willing to pay for.
I think Australia's on the path to really adopting e-commerce but I think there are two key things as a small business I'd like to see. The first is from Australia Post. I think … more investment can be done to improve the delivery options and reliability ... The second thing is more competition in payment processing. We have to acquire credit card funds from foreign credit cards and there's only one bank in Australia that will do that. When we approached them they said, 'We're happy to do that for you but you'll have to give us $10,000 as a deposit.' For a small company that's self-funded, that's quite a lot of money. You compare that to the US offerings, for example PayPal, [they don't] require that deposit. It means a lot of small business are actually moving their business to PayPal. PayPal's a fantastic service but it would be fantastic to see some more competition and innovation in the Australian space.”
Cameron Poolman: “I reckon there is a great opportunity for one or more Australian retailers to really give it to the overseas guys. Australians want to purchase from Australian companies. That's their destination. More traffic's going to Australian retail sites than it is going to American sites, it's just that we're transacting less.”
Peter Strong: “We want to make sure [the online retail space] is fair. We want to make sure that if some young person develops some new product on the internet and it takes off, that the search engines won't then direct everybody who looks for that person off to somebody else's site. Someone told me they couldn't do that because it's illegal. I thought, well, that's never stopped them in the past so I'm not sure it's going to stop them in the future either. I reckon if China can stop people looking at [websites], so can we and so can Westfield.”
Audience question: “Do you believe we've got an issue where the Australian retailer is able to buy great products from overseas now at significantly cheaper prices than what a distributor here can offer?
Paul Greenberg: “I agree with you 100 per cent, I think the channel is changing. I think there's significant disruption in the supply chain. It's probably been going on for quite a while. I think the China direct model, which Mike [of Shoes of Prey] is pioneering, is a good example of that. Straight from the point of production to the end user is well and truly a revolution. I think distributors and retail have to re-evaluate where they can add value to the experience. I don't think it's obliteration for anyone but I do think it's a time for bringing this discussion back into the boardrooms and defining how you can add value to the supply chain.”
Audience question: “One of the many studies we've done into online retailing tells us that one of the biggest barriers for traditional retailers is they don't really know what success looks like. I was just wondering what it was that told you that you had a viable business, before you actually started making money?”
Paul Greenberg: “Of course we all like metrics and KPIs and success indicators, but it's more about getting on with it and touching your customer in as many ways as you can and in as many channels as you can.”
Cameron Poolman: “Most of the listed retailers, their growth strategy's around opening more shops. I think it'd be really interesting to see that opening up a really good internet store would be more beneficial than opening up shops. Most of them have a benchmark that says 'we want our internet store to be like our biggest store'. Well, that's a good start but I suppose the success will be when it's 20, 30 per cent of their business. With us, ours wasn't overnight, it really was 10 years of straight line from zero per cent to 95 per cent. It did change over time. I could see that happening. I think the fixation with opening up more stores, we are going to saturate pretty quickly. Opening up more shops is easy, it's something that you're able to do, but the internet has the ability to be much more scalable than opening up more shops.”
Audience question: “I was curious as to how you focus on customer service because I think that's one of the keys to be in online retail.”
Michael Knapp: “We try to wow all of our customers. I think the ultimate is actually to design your website so you can minimise customer contact. For our business, girls love talking with our customer support team about their shoes but at the same time it's very expensive. It's fantastic if you can actually design your product and your website to minimise that as much as possible.”
Paul Greenberg: “In the early days of online retail we had rather a naïve view that this was a great vending machine and you could sit quietly behind a screen and watch the money roll in. As a business that's already five or six years old, we only launched telephone support four or five months ago, perhaps later than it should have been. But it gives you an idea of the kind of pain we're going through in terms of transforming. Our customers wanted it. Telephone's a channel, as is mobile, and these are channels you can't resist. Ultimately the customer will drive it and certainly that's exactly what they're doing.”
Audience question: “Online is obviously a major issue for the future but I still feel the consumer wants to go feel, touch and play with the product.”
Cameron Poolman: “I think we've got to be careful about generalisations ... We sell cars on the net, where people are purchasing second-hand cars. Less than 20 per cent of people actually look at them. That's possibly the highest risk sale that you could do and they're not looking at that. I'm not saying it's everyone, but there's a mix of different people.”
Audience question: “What do you see as the key emerging trends that will probably come to Australia? Why aren't they here already? Are there any impediments, whether it be the national broadband network or something else?”
Peter Strong: “None of our major retailers have actually charged ahead so that's what does keep it behind. The other major trend is this group buying trend, your Groupon.com or your 'deal of the day' type of site that last year I think did about $60 million [in sales]. This year it'll be about $250 million, I read, in sales. That's significant and a big change in the way people are purchasing.”
Paul Greenberg: “I actually don't think there's any trends in the US that are not here ... all the pieces are here, they've just got to be put together.”