Quick clicks: finding a fast lane for online retail
There are almost 300 ways of figuring out the price of a retail shipment, involving 27 separate formulas, with 13 different subsets. All up, a single shipping bill can have up to 54 variables.
And when you factor in the hundreds of thousands of items larger retailers stock and sell, the maths can quickly become dizzying.
So dizzying, that it is considered a stumbling block holding back the development of Australia's online retail industry – an industry haemorrhaging billions in revenue to overseas rivals.
Now Temando, a Sydney-based online freight aggregator, hopes to level the playing field for the local sector. The web-based company's technology allows customers and businesses to ship everything from chickens to cars via a few computer keystrokes.
“We enable people to sell anything big or small,” said Temando managing director Carl Hartmann. “We break down the barriers of e-commerce and take out complexities.”
In a fortnight, the technology of the growing company will feature in the new website of sporting and outdoor goods chain Anaconda.
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The need for a more competitive local online sector is clear as Aussies take advantage of the strong Australian dollar to shop online at overseas retailers. The Australian Retailers Association estimates the government has lost $600 million in GST taxes this year, as nearly half the estimated $12 billion in online retail shifted abroad.
Temando uses technology to bundle similar orders going to nearby locations, reducing costs and the time to fulfil shipments. The company says shipping costs typically fall 18 per cent for retail clients, while the time it takes to post orders drops from minutes to seconds.
The company claims its data-crunching technology - which uses a million lines of computer code compared to about 30,000 for regular websites - boosts online sales by giving consumers choice on delivery. Internal surveys by Temando show that 63 per cent of consumers, when given the option, actually pay more to have an item delivered in the method they prefer.
Temando's technology also determines whether regular post or a carrier or courier works better for individual needs or the strategy of a client, in the process, mapping out global freight patterns and availabilities of shippers that can be shared with retailers hungry for data on their online sales.
Mr Hartman, a former Fairfax employee, believes that once Australian mass retailers begin to move online, the entire industry will be transformed. “The penny is starting to drop with retailers,” he said.
The growing company, founded in 2005, is currently in talks with a number of large Australian retailers, in an effort to aid their move online. It's also in discussions with private equity firms regarding investment.
Anaconda chief executive Andre Javes says "the convenience for customers to jump online and shop at Anaconda is a big start for us”.
Even with 21 stores nationwide, the company's online retail capability will let it reach deeper.
“We're going to learn a lot about our consumers through website feedback,” said Mr Javes.
In a business selling everything from compasses and kayaks, the ability for customers to research, compare and discuss the merchandise can actually lead to more in-store sales, said Mr Javes.
For vendors, some of whom routinely deal with 25,000 or more items, a ready-made system that allows them to move products via the internet typically represents a huge shortcut to entering the online market.
“E-commerce is very complex,” said Mr Hartmann. “It's something that a single carrier can't do.” Temando partners with established freight carriers like Australian Air Express, DHL, Australia Post, Allied, TNT and Fast ways to fill the gap.
“People call us the Webjet of freights but it's more of a freight gateway in the way a PayPal is a payment gateway,” he said.
Temando, which means “I send to you” in Spanish, has about 4000 regular customers, and says it is already profitable, although the company declined to provide figures.
For companies that have online sales and rapid delivery in place, online growth has been rapid. City Software, which has not partnered with Temando, said online sales jumped 51.5 per cent last year, without any additional marketing efforts on its part.
“Online is going to become the preferred method of buying,” said City Software chief Lorenzo Coppa, of the private company with revenue over $50 million. The company has redoubled its online sales infrastructure including developing programs to assure the efficient same day or next-day delivery.
One analyst, however, believes online retail for general merchandise won't take off in Australia until the major retailers including Myer and David Jones begin competing in earnest.
David Jones's relaunched its online retail site last week offering only 1500 products out of about one million items it stocks.
Frost & Sullivan senior research manager in digital media Phil Harpur believes improved delivery is important, “but I don't think it makes a huge difference.”
"Australians living in capital cities have less need for online sales, while those in rural areas aren't economical to service,” he said.
Mr Hartmann disagrees, saying rural shoppers typically purchase more than city dwellers, while delivery costs, if handled properly, don't have to be onerous.
The top reason online consumers don't click 'purchase' on a cart full of goods is that delivery is too expensive or it doesn't have the options that a consumer wants.
“If customers get an item quick and painlessly, they're likely to procure again,” he said.
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