Australia boasts a robust and diverse economy, consistently ranking among the world's top 15 wealthiest nations. With a GDP of over $1.9 trillion and a per capita income of over $55,000, Australia presents an enticing market for ecommerce retailers.
Australian consumers are known for their discerning tastes and willingness to spend. In 2022, total retail sales in Australia reached a staggering $437 billion, with online retail sales accounting for over 15% of this figure. This growth trajectory is projected to continue, with eMarketer forecasting that online retail sales will reach $86.7 billion by 2025.
Unique Characteristics of the Australian Market
Australia has the second highest number of ecommerce brands per capita in the world. This is likely due to a number of factors, including the country's high internet penetration rate, strong consumer confidence, and growing adoption of mobile shopping.
Australia boasts one of the highest internet penetration rates in the world, with over 90% of households having access to the internet. This high connectivity drives online shopping behavior and presents a significant opportunity for ecommerce retailers.
Fashion remains a dominant force in Australian ecommerce, accounting for over 20% of all online sales. Australian consumers are style-conscious and appreciate quality and value in their fashion choices.
Mobile commerce is on the rise in Australia, with over 50% of online purchases now made via mobile devices. Ecommerce retailers must ensure their websites and shopping experiences are optimized for mobile users.
Importance of Localizing Your Business for Australian Customers
To succeed in the Australian ecommerce market, retailers must adapt their business strategies to cater to the unique preferences and expectations of Australian consumers. Localization strategies should encompass several key areas:
Translate your website into Australian English and ensure it is culturally appropriate. Use Australian currency (AUD) and display prices in a clear and consistent manner.
Offer popular Australian payment methods, such as Afterpay, Klarna, and PayPal. These BNPL (Buy Now, Pay Later) services are increasingly popular among Australian shoppers.
Partner with reliable Australian logistics providers to ensure timely and efficient order fulfillment. Offer competitive shipping rates and ensure clear communication regarding delivery timelines. We’ll share more on Australian shipping and logistics in a chapter further on in this eBook.
Provide exceptional customer service with a local presence. Offer Australian customer support hours and ensure your customer service team is well-versed in Australian consumer expectations. We’ll dive into specific customer support in a subsequent chapter.
By understanding the nuances of the Australian market, adapting your business strategies to local preferences, and providing a seamless and localized shopping experience, ecommerce retailers can successfully navigate the dynamic Australian ecommerce landscape and reap the rewards of this thriving market.
Australia Entry Strategies
Entering the Australian market demands a strategy that aligns with your business objectives, product type, and the distinctive dynamics of the region. We’ve outlined three main strategies and provided a case study on the following pages that puts these strategies into practice.
In-country fulfillment
One viable approach is sending your products to Australia in bulk and placing them in local warehouses for in-country fulfillment. This means working directly with a warehouse or 3PL (third party logistics provider) to access local storage and fulfillment. This method provides direct entry to the market, fostering closer engagement with customers, suppliers, and regulatory bodies.
Furthermore, by establishing strategic fulfillment centers near key seaports, such as Sydney and Melbourne, you’ll ensure efficient distribution. By harnessing local fulfillment, you are able to use less emissions- intensive transport closer to where your customers are located. This in turn helps reduce emissions, speed up delivery times and drive down costs, which become savings that can be passed on to your customers.
However, in-country fulfillment requires upfront investment and customs processing (by sending a large shipment of products), as well as committed partnerships with Australian suppliers, making it more suitable for businesses committed to long-term growth in the Australian market.
pros
Direct access to the Australian market
Closer engagement with customers, suppliers, and regulators
cons
Upfront investment
Time consuming and not flexible
Direct Injection
Direct injection is the process of consolidating multiple orders for the first leg of their journey overseas, after which they’re ‘injected’ into the destination country’s courier network for final delivery.
Direct injection is primarily utilized for products sourced from mainland China. Typically, these products are cross-docked to Hong Kong, from where they are dispatched to global destinations. This method is especially popular for shipments to Australia, the UK, Europe, New Zealand, and the U.S.
By using direct injection, you’ll be streamlining your supply chain, cutting out middlemen and using solutions that directly connect to your customer. Instead of completing customs and paying for tax on a large shipment of products, you’ll be handling these requirements on a as needed basis, once customers have purchased your products, greatly reducing costs and admin. Customs are completed whilst orders are in transit, ensuring goods can be directly handed off to a courier once they’re in-country.
pros
Cost-effective sourcing from manufacturers
Less compliance challenges
No upfront costs
cons
Requires partnership with a partner that has a deep knowledge of local trade and import regulations
Slower than in-country fulfillment
Partnerships and Distribution
Partnerships and distribution agreements with local entities present another avenue. Collaborating with local distributors or retailers can accelerate market penetration, leveraging their established networks and insights into local market nuances. However, businesses must be mindful of the dependence on partners' capabilities, potential profit-sharing, and the risk of brand dilution.
pros
Accelerated market penetration through local partnerships with built in customer bases.
Insights into local market nuances from distributors.
cons
Dependence on partners' capabilities and commitment.
Profit-sharing and potential brand dilution.
These strategies cater to different business models and market entry preferences. The choice depends on factors such as the level of commitment, budget, and the desired level of control over operations. Choosing the right market entry strategy is a nuanced decision that requires a thorough understanding of your business model and goals.
To understand how you might choose the right entry strategy, we’ve delved into the specifics through a case study example:
Anna owns a company that specializes in high-quality sustainable camping gear, hiking equipment, and outdoor apparel. Her objective is to establish a strong market presence and become a leading supplier of outdoor adventure equipment in Australia. She understands this could take some time but she’s committed to exploring it. She thinks her brand will have a strong market fit as Australia has a diverse natural terrain and existing outdoorsy community. Because sustainability is at the heart of her business, she wants to build a logistics entry strategy that incorporates greener ways to transport her products.
With all this in mind, she decides on in-country fulfillment. Yes she’ll have to find a local warehouse or 3PL to work with and there's an upfront investment in sending and processing through customs a large amount of products to Australia, but then it’s local from there. Local delivery costs, local delivery times. By keeping products closer to her customers, her package journeys will be shorter and she’ll be producing less emissions per journey.
