Retailers pull their online presence as sales plummet

Little more than an effective catalogue, the Internet is necessary only to educate people on product range and is now a shopping "fairytale", according to the country's biggest retailers, despite statistics that show Australians are confident online.

Australian Internet shoppers spent around $1.9 billion in 2001, rising to $4 billion in 2002; however, large retailers claim sales for goods have dropped so dramatically there is little point offering an online shopping portal for their wares.

A survey conducted by the Australian Bureau of Statistics found that 15 percent of all adults using the Web did so specifically to shop, spending $4 billion online in 2002; however, retailers complain online sales do not come close to offering an effective ROI.

Coles Myer reported an EBIT loss of $8.3 million between that period due to the integration of the purchase of online portal Shopfast. Retail giant David Jones completely ceased online trading and homewares group Harvey Norman sees no actual point in pushing online sales, with IT director John Slack-Smith saying its online trading is going absolutely nowhere.

"If Internet sales equalled 5 percent of total revenue then I would be very surprised; Internet shopping is an absolute fairytale now," Slack-Smith said.

"Any organisation needs to have a presence on the Internet if nothing more than to provide store information but from our point of view the infrastructure behind shopping online should be viewed in the same light as anything else: spending money on an infrastructure that has to give a return on investment.

"We launched online in 2000 and found it a wonderful medium to provide education and information to customers. It is a terrific way to market business, but in regard to sales and all of the infrastructure required we live in a shopping culture and sales are a non-event as customers are using what they learnt to walk into the store better researched."

However, online retail sales from the Australian Broadcasting Corporation (ABC) have never been better, or more profitable, according to retail general manager Doug Walker.

Walker said the ABC's online sales compete directly with its over-the-counter sales figures and grow larger by the day. "Our home shopping sales, which includes sales made through radio, fax and Internet orders make up 3 percent of our total business but 71 percent of those sales is made through the Internet," Walker said.

"Our over-the-counter sales have grown 7 percent but online has increased by 36 percent.

"DVDs are trading their heads off online at the moment, but the last survey we did showed 60 percent of visitors online don't convert to purchase. However, we view the online shop as an integral part of business. A lot of people prefer the personal experience of shopping and use the Internet as a research tool and I think dealing with a known brand gives a level of comfort regarding reliability, security and privacy."

Does Internet marketing work for you? E-mail to Michael_Crawford@idg.com.au

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