Long-distance relationships and Australian e-commerce
Culture and favorable market conditions have driven strong e-commerce uptake amongst Australian consumers.
Australian e-tailers frequently struggle with the long distances for most of their deliveries.
Selling to overseas markets like China requires Australian merchants to keep logistics flexible and cost-effective, even with small shipments.
Australia is no longer down under.
The fact is, the internet has made the world much smaller and even though you will find us at the bottom of all maps, we hold strong long distance relationships with the rest of the world when it comes to e-commerce.
In e-commerce terms, Australia remains well and truly the lucky country. Despite our relatively small population of 22 million people, we’ve established a strong and mature e-commerce market with enviable ties to some of the world’s fastest growing markets – despite them being relatively far from us in geography. In fact, according to a number of research papers, Australia ranks one of the top countries in terms of internet use, mobile adoption and mobile purchasing.
While Australians do tend to embrace technology faster than many others around the region, a lot of our e-commerce growth does come down to good fortune. Between mid-2011 to mid-2013, for example, the AUD traded at parity with the USD and this fuelled significant growth in the inbound e-commerce market. Australians’ adoption of online shopping accelerated and despite the AUD to USD now being 30 percent weaker, the thirst for international brands remains.
“We often talk about last-mile delivery as the make-or-break for e-commerce players, but in Australia the first mile often proves even more challenging.”
At DHL eCommerce, we’re seeing increasing demand not only for international shipping services, but also the integration between these services and e-tailers’ front-end sales channels. As demand grows overseas, e-tailers have recognized they need more automated, streamlined processes if they’re to keep satisfying consumer needs while growing their order traffic and volume.
Keeping up long-distance relationships
Many people underestimate Australia’s size: the country is geographically as large as the US and 1.3 times bigger than Europe. It takes as long to fly between New York and Los Angeles as Sydney to Perth – and a parcel that weighs half a kilogram costs just as much to be transported from Sydney to Brisbane as it does from Sydney to the US. In the Great Southern Land, delivery times and shipment costs can often challenge e-tailers, particularly on the domestic front.
We often talk about last-mile delivery as the make-or-break for e-commerce players, but in Australia the first mile – the transit between cities or countries – often proves even more challenging. SMEs need affordable solutions for even small goods in small batches: from our experience, most of their shipments have a value of AU$75 or less. Our job as logistics providers is to keep these delivery costs effective even when businesses haven’t reached economies of scale.
At times, Australian merchants have had trouble with sudden changes in overseas regulations – most recently the policy adjustments made in China that removed, then reinstated, many of the concessions given e-commerce purchases from Australia and other overseas exporters. For most Australian e-tailers, however, China’s market opportunities remain worth dealing with some operational uncertainty. Its growing middle class of 600 million people attaches great importance to high-quality products and the Australia brands symbolize and represent this.
For most e-tailers considering entering or expanding further into China – and indeed any other overseas market – slowly testing the market and technology usually yields the most sustainable results. The strength of the “Made in Australia” brand holds true in not just China, but a range of mature and emerging markets alike including Japan, South Korea, and India.
To leverage this growing demand, we are very pleased to be enhancing our product suite to cater to postal and economy solutions that are now aligned with the value of the product and the expectations of your consumers. If e-tailers can keep the quality of products high and the delivery process painless – no matter the distances or regulations involved – we can be sure that Australian e-commerce stays lucky for years to come.