I am a few months removed from my week at the Online Retailer conference, and while I spent some time discussing the challenges of Australian e-commerce, I believe that there is a very big opportunity.

There are swaths of the market that are open go from higher end (The Iconic) to the curated (Surf Stich) to the mammoth (The Nile). Today’s Australian e-commerce scene is advanced in terms of design, functionality and business model. This is a country where a pure-play online company can capture meaningful revenue through differentiation. While they compete with the offline stores, the Australian e-commerce scene isn’t trying to beat traditional retailers, but rather pursue an independent path of success.

What is truly refreshing is that the online players are trying to win at their own game rather than by stealing share from someone else (that market share swap inevitably happens, but it isn’t the point…). What I mean by this is the online player in Australia is thriving because of their skill at their business, not because they capture customers because of discounts, gimmicks or esoterica, they win business because they efficiently serve their markets. They maximize their efficiencies and minimize the friction. On some level, I attribute this to the lack of Amazon effect. While Amazon serves Australia, it does not have a domestic presence there. Amazon has not yet entered the market with its margin eroding model. This absence of economic disruption has allowed the eco-system to thrive in a way that allows for more players to survive. This is no small advantage. Without the Amazon lowest-price pressure, there is more breathing room. Businesses fight each other on a more level playing field, and the race to the bottom has slowed. It is, perhaps, a kinder environment that allows more flora and fauna to thrive rather than the austere landscape of the Amazon desert.

So what does all this mean? First, it means that Amazon has an opportunity to be very disruptive in this market, so be prepared. But also it means that for the time being, Australian e-commerce players have the opportunity to grow their businesses with reasonable margins so they have the luxury of innovation WITH resources. With focus on the beauty of the customer experience and wrenching the friction out of the transactions, these businesses have the opportunity to innovate out of profit dollars rather than loss-leading investment dollars. By growing out of profit, the opportunity is tempered by the size of the profit. This requires more rigorous decision making than having a trunk full of VC dollars. With a smaller pot of cash, the innovation will happen incrementally, rather than with the madcap frenzy of boom and bust investment cycles.

The end result may be that consumer innovation happens more slowly, but the economy will be more diverse, more healthy, and more stable. Stability and health will drive trust, engagement, and happy customers.

Comment now!
















Trackbacks