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Industry Contributor 27 Apr 2021 - 4 min read

Australia, the perpetual laggards in a booming e-commerce world?

By Nancy Lan, Managing Director - Starcom Sydney

Covid forced Australia to embrace the digital age, and condensed 15 years e-commerce growth into a single year. But even so, the experience gap between here and advanced digital economies is growing. There are massive, growth-accelerating gains for brands that invest in better online commerce experiences. Don't wait for another pandemic – grasp them now.

What you need to know:

  • The UK and China in particular are taking e-commerce to another level.
  • Australian brands could dramatically change their fortunes by applying some of these smart approaches and customer experiences.
  • We need to invest in digital experiences which showcase brands in imaginative ways, and make everything easy from start to finish.
  • Sounds simple, isn't. But the brands that get it right will win – as will Australia's online shoppers.
  • Don't wait, invest in tech, talent and resources now.

After several years of living in the UK and China, where e-commerce is part of everyday life, coming back to Australia in 2016 was liking walking into the stone ages of digital retail. Then 2020 changed that entirely.

There’s no doubt a silver lining of Covid has been Australia’s firm embrace of e-commerce. Last year was unlike any other; a year where e-commerce saw an explosive 57% growth, accounting for over 16.3% of total retail sales, according to Australia Post's Ecommerce Industry Report.

Pre-pandemic, e-commerce as a percentage of total retail sales was growing at an average of 5.15% over the five previous years and at that growth trajectory, we would not have seen the numbers we saw in 2020 until 2035. So to say that Covid was a lightning in a tea-cup for the world of online retail is an understatement!

But how far have we really come and have we caught up to the leading global markets?   

From the UK to China

Arriving in London a decade ago, I was struck by how advanced the Brits were in their online shopping habits. Amazon was a mainstay, offering a world of consumerism and instant same day gratification at my fingertips. Online supermarket shopping cut down grocery trips, creating more time to peruse the high streets and eat our way around town.  

If the UK was a revelation, China redefined the e-commerce world for me when I landed in 2013. Driven by the growing middle class and the affluence of millennials, 50% of the world’s online transactions take place in China and Alibaba holds 50% of this half. On Taobao (C2C) and Tmall (B2C), you could add everything from groceries, slow cookers, Hermes handbags and even cars to the check out.  

But it wasn’t just  what you could buy that was ground breaking, or even how seamless Alipay (wallet/mobile enhanced payment system) was to transact with, it was the experiences brands created which blurred the physical and online worlds. A key category which drove this innovation was the luxury sector.

Having worked on LVMH, L’Oreal and Kering over four years in Shanghai, I saw first-hand the pace of evolution as they tried to keep up with consumer expectations. Every launch was an opportunity to create personalised, interactive and immersive brand experiences, where consumers were transported to an aspirational world.

Driven by this consumer and subsequent client expectation, our agency talent profile changed rapidly. Our content teams created digital environments enriched by augmented reality, social interactivity and online worlds, which enhanced the in-store experience. Our performance team quickly pivoted to e-commerce platforms – they were as proficient in managing Alibaba search strategies as they were in transacting on Baidu. Search talent was synonymous with e-commerce talent.  

Bad for business

Fast forward half a decade, driven by a raging pandemic, the UK and China have further accelerated the e-commerce experience. Customers in the UK are demanding better experiences and using their choice to change the market dynamics.

According to e-marketer, as many as 57% of online shoppers in the UK say they’ve stopped buying from online merchants because of a bad experience or they have found a better experience elsewhere. Four key factors they call out as driving their choice include:

  • personalised shopping experiences (AI-driven product recommendations);
  • ease of purchase through subscription models with frictionless customer service (chat bots, real-time customer service);
  • digital experiences which simulate the physical, in-store experience (AR, interactive experiences); and
  • speed and ease of fulfilment (delivery speed and ease of returns).

All of which are shifting the power dynamic between brands and retailers.

In China, e-commerce livestreaming – the coming together of influencers and commerce – has emerged as a winning strategy over the last 12 months. Part infomercial, part variety show, this meets consumers perfectly on their desire line in the COVID reality, delivering boredom-busting entertainment through talent-led content and interaction and the convenience of in-home, instant gratification consumerism – another elevation in the digital experience.

Closing the experience gap

While 2020 was undeniably a game-changing year for the e-commerce industry in Australia, other markets have seen even greater digital experience acceleration, driven by harder, more prolonged periods of lock down where e-commerce innovation was a necessity for survival.

As a result, the digital experience gap between us and the advanced markets is growing. This growing gap is something we should and need to care about because Australians have a latent desire for convenience shopping that is currently not fully fulfilled. In fact, Foresight Factory in 2020 shows that Australian consumers are second, only behind the UK and ahead of both Chinese and US consumers in terms of their desire for more instant gratification and convenience shopping. 

If we are to close this growing experience gap, we need to push our clients, our peers and ultimately consumers to expect and demand more rather than live in blissful ignorance. We need to invest in digital experiences, which showcases brands in imaginative ways. We need to meet sensorial expectations and we need to remove friction and expedite fulfilment.

As an industry, we need to shift our talent mix and develop skill sets because there is a talent shortage in market to truly transform the e-commerce landscape. We need to do this now because we can’t afford to wait for another once in a life-time pandemic!

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Nancy Lan, Managing Director

Starcom Sydney

Nancy is a passionate leader with 15 years of experience in client, media owner and agency roles across the UK, China and Australia. She has worked across multiple sectors, focusing on the application of strong business acumen to marketing and media to drive business outcomes.

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