Hitwise Intelligence - Alan Long - Asia Pacific

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Online Gathering Retail Muscle

August 15, 2008

Earlier this month my colleague in the UK, Robin Goad, posted a blog, titled "High street retailers winning the online battle" looking at the online shopping battle between High St traders and pure play online retailers. It noted that the High St traders were starting to pull away from their online counterparts in garnering online traffic share.

Down Under it seems we have a different picture evolving and the traditional retailers should be considering responses to alter this emerging trend.

The chart below which compares a custom category of Online Retailers with a custom category of the top 100 Bricks and Mortar Retailers in Australia (ranked by online market share) including Coles, Dick Smith Electronics and Harvey Norman, suggests that the margin between the two categories has closed substantially during July, after an Australian traffic difference of 28.7% at week ending June 21.

The Online Retailers custom category consisting of the top 100 pure-play online only retailers, such as Amazon.com, DealsDirect.com.au and StrawberryNet-Australia, dominated their Bricks and Mortar counterparts in the lead up to the end of financial year sales. This is a worrying aspect when we review the historical patterns leading into Christmas, where the share growth of Online Retailers has outpaced the traditional Bricks & Mortars businesses.

The overall growth trend of both the Bricks and Mortar and Online retailers is promising but the Australian market share trails the UK substantially. High Street Traders enjoy 208.3% higher traffic share in the UK than Bricks & Mortar retailers in Australia, while UK online retailers generate 154.1% higher traffic share than their Australian counterparts.

There is good reason to be optimistic about retailing activity online, there is strong growth and opportunity for further exponential growth as broadband speeds improve and larger marketers embrace the channel. The time is nigh, are new competitors muscling into your traditional space? If so, it's time to up the ante!

In our recent Webinar, "Christmas Retail Planning" our Senior Analyst, Sandra Hanchard, reviewed search determinants such as 'free', 'cheap', 'prices', 'discount', and 'used' and their association with specific industries. This analysis may assist in highlighting the value and share received by online retailers leading into the end of year sales. I recommend that you put aside 30 minutes to view the Webinar presented by Sandra and I.

And, as always, we urge you to follow Hitwise Asia Pacific on Twitter to keep up with the latest Internet data and trends.