Australia Post makes a play for online retail

Online retail is the future of the Australia Post business according to Post Logistics Group Manager International Supply Chain Jo-Ann Murphy

Australia Post makes a play for online retail
Australia Post makes a play for online retail

By Anna Game-Lopata |
March 14, 2011

Online retail is the future of the Australia Post business according to Post Logistics Group Manager International Supply Chain Jo-Ann Murphy.

Murphy tells SupplyChain Review that online retail is here to stay.

"The convenience of retailing online is opening markets that have traditionally been inaccessible to all but the global travellers," she says.

"Savvy shoppers are purchasing products online for value and convenience."

Murphy predicts a clear role and market advantage for Australia Post as online purchasing provides retailers a number of opportunities to streamline their supply chains.

"The need for visibility, delivering as promised and instant gratification with purchases often precludes the use of ocean freight from overseas countries," she explains.

"This results in the vast majority of global online purchases moving using commercial airfreight, courier or mail services, such as those provided by Australia Post.

"Global e-tailers are shipping into Australia utilising mail and Self Assessed Clearance (SAC) entry processes, which gives them a jump on local retailers.

"By shipping using mail or below the customs and tax thresholds the global retailer can often supply the goods for 25 percent less without eating into their margin at all."

"Products are able to be shipped using the most direct route to market by passing multiple distribution centres and touch points along the way, resulting in a reduction in overall supply chain costs."

"Taking the most direct route to market directly is also a good way to improve sustainability," she adds.

"Carbon emissions are reduced as kilometres are taken out of the supply chain and there is less redundant stock in the process."

Murphy points to an opportunity in terms of returns– a pain for all retailers.

"More effective returns processes have encouraged consumers to purchase products on line that perhaps they would not have in the past," Murphy says.

"Shoes are a good example, with some online retailers providing the option of sending multiple sizes to a consumer and the consumer returning the ones that don’t fit.

"It’s all as simple as dropping the return into to the local post office."

Murphy says trends seen in the US and Europe are similar to those in Australia, so the future for Post Logistics is tied to finding a way leverage the opportunities for Australian retail customers.

A report from Forrester Research forecasts that online purchasing in Australia will hit almost $37 billion by 2013.

Last year, online retail consumer spending in Australia accounted for approximately 5 percent of total retail sales.

Current statistics also show that 40 percent of all Australian online purchases are made from overseas sites, with a 25 percent spike following the strengthening of the Australian dollar over the last six months.

In the US, amid global financial crisis, online retail grew 11 percent in 2009 to reach $155.2 billion.

"US online retail sales are expected to reach $248.7 billion by 2014. They are growing at an annual compound rate of ten percent," Murphy says.

With the top product categories including computer hardware, software and peripherals, apparel, accessories, footwear and consumer electronics, online retailing is also one of the fastest growing markets in Europe.

"Worth EUR44.7 billion in 2003, online retailing in Europe grew by 221 percent to EUR143.7 last year," Murphy says.

"E-commerce sales continued to perform strongly in 2009, growing by 22 percent and representing 4.7 percent of total retail sales across Europe.

"The European online market has been growing faster than its counterpart in the US for the last three years, and this trend is set to continue," Murphy says.

She predicts a falling dollar is about to leave Australia with shoppers accustomed to buying online, but with less opportunity to access ‘cheap’ US dollar products.

"A falling Aussie dollar will also present global online shoppers with access to ‘cheap’ Australian items," she says.

"We at Post Logistics intend to be well positioned to leverage our business for retail customers when this happens."

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