Ecommerce shipping to Australia

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Author: Fran Ereira, Vice President of Asia Pacific, Temando

Do You Ship To The Land Down Under?

Where eCommerce glows, and shipping can plunder

Australia - Hosier Lane Shopping

Image: Hosier Lane, a famous laneway in Melbourne, Australia, is a favourite with many shoppers due to its colourful graffiti art and proximity to the city’s shopping precinct.

A worldwide eighties hit, ‘Down Under’, from Australian band Men At Work may still be sung at karaoke bars the world over, but since then much has changed in Australia. Nowhere do we see its transformation more clearly than in retail; digital adoption, increasing accessibility, and economic stability resulted in online retail sales1 of USD $9.5 bn last year, which are projected to reach USD $15.4 bn by 2021. However, this success is not without its challenges.

 

As a retailer looking to enter Australia, you’ll need to be aware of how shipping in this widely fragmented country can affect your business, and what you need to do to meet customer expectations. As the sixth largest country in the world at 7.7 million square kilometers, it may sound like there’s plenty of space for its 24 million residents, but 90% of its population are city-dwellers in one of the many ranked as the world’s most livable cities. Here are two unique differentiators about Australia’s eCommerce landscape:

  • eCommerce fragmentation
    The lack of infrastructure connecting the cities across this vast country has resulted in fragmented eCommerce. Unlike the pace of Internet adoption (85.1%2 of the Australian population are Internet users in 2016) and smartphone usage (forecasted at 16.6 million users in 2017), the Australian eCommerce space still has plenty of room to grow. While challenging3, it presents retailers with a great opportunity to get creative.
  • Domestic vs International players
    The 2016 NAB Online Retail Sales Index4 reported that “domestic retailers continued to show strength against international counterparts, accounting for about 81% of spending in March.” As a new entrant to the local market, you’ll be competing with not only 47,153 eCommerce businesses growing annually at 16.2%, but also the rumoured launch of Amazon Australia5 — so having a competitive edge in this saturated, but lucrative, market will put you in a better position to achieve success.

 

Now let’s look at some tips for eCommerce shipping to Australia.

Aussie shoppers and shipping

For The Delivery Advantage, a Temando report on eCommerce shipping strategies, we surveyed 4,128 shoppers and 852 retailers, out of which 1011 shoppers and 212 retailers were Australian. Based on the research, we found that 92% of Australians spent up to AUS $500 monthly online, with over a third spending at least AUS $100 monthly. The convenience of round-the-clock accessibility trumps price and free shipping as reasons why they shop online. Shipping played a significant role in cart abandonment, with 85% of Australians admitting to abandoning their carts primarily due to shipping-related reasons.

 

Five key facts:

  1. 70% of carts were abandoned by Australians due to the high cost of shipping versus 63% by Americans.
  2. Almost a third of Australian retailers charged customers the full shipping cost, while 44% shared the costs of shipping.
  3. 62% of Australian retailers saw a reduction in cart abandonment when the number of shipping options increased.
  4. Standard (5-7 days), express (1-3 days) and click & collect are the top three most common shipping options that Australian retailers currently offer.
  5. 83% of Australians have used or want to use same-day shipping, and 75% have used or want weekend or afterhours shipping.

Using shipping to convert and retain

From this research, it’s safe to conclude that getting shipping right can have a significant impact on your eCommerce business. 79% of Australian retailers saw an increase in sales when they increased the number of shipping options at checkout, with 20% reporting substantial increases. So refining your shipping strategy to reflect the needs of Australians prior to launching your site in the country can make the journey that much smoother. Here’s some tips to help you get started:

 

  • Get your minimum spend right
    Formulate the amount that shoppers need to spend to qualify for free premium shipping, so that it covers some or most of your shipping cost. 62% of Australians are willing to increase their spend to qualify for free express shipping, so make the most of it, and create goodwill with customers along the way.
  • Charge for a premium service
    Although everyone prefers to get everything for free, we know that it’s unsustainable. This thinking applies to Australian shoppers, who acknowledge that delivery services need to be paid for. The top three shipping options that they’re open to paying for: express, same-day, and weekend or afterhours shipping.
  • Keep communications lines wide open
    There’s a strong interest among Australian shoppers to have better control of their post-purchase experience. On top of their wish list is the ability to make changes to their shipping while their online orders are in transit, and receiving text or SMS communications throughout the shipping process.
  • Increase automation of shipping
    To gain a competitive edge over the 31% of Australian retailers who still rely on booking couriers manually, and the 47% who still process labels manually, automate as much of the shipping and fulfillment process as you can to achieve economies of scale.
  • Make retail stores work harder
    Currently, 72% of Australian retailers ship from one location, which makes the cost of delivering online orders expensive as eCommerce continues gaining popularity across this vast country. With the right technology in place, you can increase the value of your retail stores by turning them into distribution centers serving local areas, as click & collect locations, and returns drop-off points.

Spotlight on Australian retail icons

Doing business in Australia is tough, yet if you get it right, is rewarding. Here’s two local retailers – who cannot be more different than the other – that have found common ground in their quest for innovation:

 

  • Myer, an Aussie legend
    Under CEO Richard Umbers, Myer, an iconic department store founded in 19006 stayed at the forefront of Australians’ minds with a “new Myer” strategy that explored new ways to retail. From entering the marketplace via a eBay, to creating the world’s first virtual reality department store, to introducing shipping options, and testing its retail stores as distribution centres, Myer continues to delight generations of Australians online and offline.

Australia - First Virtual Reality department store

Image: CNET | In 2016, Myer collaborated with eBay to reinforce its position as a forward-thinking retailer, by launching the world’s first virtual reality department store - complete with its own branded ‘shoptacles’.

  • THE ICONIC, a new-gen superstar
    This 2011-founded pure-play retailer have survived many bumps in its early days, including grumblings about its aggressive tactics, and a high-cost model aimed at customer acquisition. However, by focusing on optimising technology to enable shoppers to have better control over their pre-to-post purchase experience, THE ICONIC has emerged on top: sales exceeded $100 million in 2015, customer numbers hit one million in 2016, and the company accounts for 5-10% of online fashion sales in Australia.

Australia - The ICONIC

Screenshots source: THE ICONIC | THE ICONIC is one of the first Australian pure-play retailers who have invested heavily in the post purchase experience with five great shipping options: hyperlocal, after hours, same-day, express, standard, and weekend shipping.

The questions that you’ll need to ask yourself now are:

 

Are you able to offer Australians with an outstanding shopping experience? Are you equipped to turn shipping into a profitable value proposition? What tools do you need to get there?

 

Don’t let shipping plunder your profits, when it can very well be the key differentiator when you launch your eCommerce store in the land down under.

 

Download The Delivery Advantage ebook for more ideas on improving your shipping strategy.

 

Note: Unless referenced, all data in this article is from an online retailing survey that Temando commissioned in 2016, which includes participation from 1011 online shoppers and 212 retailers from Australia.

 

 

1 - eCommerce Sales in Australia 2015 to 2021

2 - Australia Internet Users

3 - E-Commerce in Australia

4 - NAB Online Retail Sales Index

5 - Amazon looks to July 2017 entry to Australia

6 - MYER Online Retailer

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