Anthony Doesburg: Online retail revolution has lots of room to run

Many of us like a little retail therapy when we're feeling dissatisfied with life. An increasing number are opting for online shopping - or etailing - as a pick-me-up.

According to Nielsen Online, 45 per cent of adult New Zealanders, or 1.4 million people, shopped over the internet in the last quarter of last year, up from 39 per cent a year earlier.

The number dipped at the start of this year, but that's undoubtedly due to the recession, rather than being indicative of etailing having reached its peak. There are too many reasons for its continued expansion for that to be the case.

For one thing, half the population hasn't yet discovered how extraordinarily convenient shopping online can be.

Who would go to a mall when, as a member of my household did, you can place an online order on a Thursday night for the latest electronic gizmo from the US company whose name is a piece of fruit, and have it arrive from the factory in China on Monday morning, with her name engraved on it.

Or, as I did the other day, buy a shirt via the website of a well known menswear store after browsing its excellent online catalogue and taking advantage of an internet-only discount.

I'll take any opportunity to buy goods and services online, rather than add to the traffic on the roads, go insane in some call centre phone queue or have to find a stamp and envelope to stick a cheque in the mail.

But my adoption of etailing is ho-hum by some standards; Retailers Association chief executive John Albertson recently met someone who hadn't set foot in a shop for months.

"I find, at my age, that very hard to believe, but he had actually bought absolutely everything online for the last three months - groceries and whatever else. I'd have the tremors setting in if I hadn't been to a shop for that long."

The person Albertson had encountered was the kind of shopper first sketched out for him a decade ago by an American retail specialist - someone who grew up with computers and the internet and knows no other way of shopping.

They're still a minority but their inevitable rise would suggest bricks and mortar shops are an endangered species. In fact, it's the pioneers of etail-only shopping - FlyingPig, in 2000, and Ferrit, as recently as February - that have been perishing.

Bricks and mortar, meanwhile, is evolving into clicks and mortar, as demonstrated in June when The Warehouse opened an internet shop, with chief executive Ian Morrice saying physical and online stores support each other.

Albertson agrees - where The Warehouse has gone, other major national retailers that aren't already online will have to follow. "There's going to be an expectation that national chains in particular have an online presence and, if they don't, they're going to be penalised accordingly. They need to do it as a measured, strategic activity, but they need to do it sooner rather than later."

That's not to say there aren't still perils for online traders. After attending to minor matters like designing a user-friendly website, secure payment system and a sound process for ensuring listed products are actually in stock, there's the biggie - getting the goods to the customer.

"The real trick is making sure that the distribution end is right - that once the order has been placed, the payment is handled properly and the goods arrive in good condition and as requested.

"All of those things will determine whether the consumer comes back again."

As in the low-tech world of mail-order sales, to ensure the retailer's slender margins aren't eroded - they average 4 per cent across the sector - order fulfilment has to be accurate.

"You've got to make sure you get it right as often as possible because, if you've got goods going backwards and forwards between a consumer and an outlet, the margin disappears very quickly."

Sure enough, my shirt went back when I didn't like the colour - but at my expense.

The association is doing its bit to help retailers get it right by staging etailing seminars, most recently in Auckland last week. The idea is to introduce them to the state of the art in internet shopping and steer them towards site development specialists.

We would seem to have some catching up to do. According to market researcher Global Retail Insights, 12 per cent of total retail and wholesale turnover in Europe last year was transacted online, and the value of global online retail sales was put at more than US$300 billion ($400 billion).

Albertson guesses just 2 per cent of New Zealand retail sales are taking place online, worth about $1.2 billion. So, of the millions of Kiwis engaging in etail therapy, most seem to be just window shopping.