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Section Eight
Retailing
8.1 Description of the sector
The retail sector is comprised of a large number of sellers that enter into
transactions for final goods and services with customers. Within the
supply chain, a retailer can be either a stand alone shop or be an arm of a
manufacturer or provider of the good or service.
The retail trade sector contributed over $30 billion, or 5.8 per cent, of
GDP in 1997–98. The sector employed over 640,000 people as at June
1999, making the sector Australia’s second largest employer after the
manufacturing sector.
The main challenge e-commerce presents to the retail sector is the rise of
Internet shopping. Internet shopping sites are being created by retailers,
manufacturers, and e-commerce companies. Whether or not retailers in
certain markets allow themselves to be disintermediated from their
customers in future distribution arrangements will depend on their
willingness to adapt to new environments of e-commerce. A number of
lists of ‘Top Shopping Sites’ in various categories show e-commerce
companies highly represented but traditional retailers barely represented.
An additional danger to retailers is that more consumers are using the
web to research products and services before purchasing, instead of retail
sales staff face to face. This emphasises the importance of product and
service information on the web, as consumers may only contact a retailer
once they have made their choice. This reduces the ability of sales staff to
sell ‘value-add’ such as after sales service to compensate for higher prices.
8.2 Retail and the Internet
Purchasing and purchasing power is growing on the Internet. In the US,
53 per cent of Internet users shop online. The average transaction is now
worth US$4 600 although this figure varies for business-to-business and
business-to-consumer spending.
The number of regular Internet users in Australia is around ten per cent
of the population, and this sample is skewed toward middle to high
income groups. The profile of Australians using the Internet to shop is
summarised in the box below.
Box 8.1
Australians shopping in cyberworld
Australian frequent online shoppers are on average 25–35 years old, highly
educated, ‘early adopters’ of the Internet & typically in professional occupations.
The online shopping experience is becoming popular amongst regular Internet users,
but still remains a peripheral activity on the Internet, despite the degree of interest
it excites. There are more than 66 per cent of regular Internet users who have tried
online shopping in Australia more than once and the percentage of users who have
tried online shopping more than ten times has increased to four per cent.
Australian online shoppers spent some $139 million online in the 12 months to
July 1998. The largest product categories continue to be books, music and software.
According to www.consult’s Director of E-commerce and Online Shopping, Richard
Sandlant ‘Today’s online shoppers are early adopters, adventurers & experimenters.
Both buyers and sellers will have to expand their frontiers and explore new modes of
commercial functionality on the Internet, because the task of converting Internet
users into online shoppers is clearly not to be underestimated.’
Source:
www.consult, http://www.consult.com.au
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