A strong dollar and the benefits of tax free imports claim 40 percent of Australia’s online retail spend, as local retailers lag
By <a href="mailto:agamelopata@acpmagazines.com.au“>Anna Game-Lopata | August 30, 2011
Australia’s overseas online retail spend has sparked a change in attitude towards e-tailing among domestic retailers, according to visiting Manhattan Associates CEO Pete Sinisgalli.
Based in the US, Sinisgalli, spent last week reinforcing the leading supply chain technology provider’s commitment to Australia by bedding down a number of strategic relationships and new appointments in the region.
In addition to the appointment of new Australia and New Zealand (ANZ) Managing Director, Raghav Sibal, a Manhattan veteran of nine years, the company hired a new Sales Director and Regional Director of Retail.
Both will be responsible for growing and supporting the company’s customer portfolio in Australia, New Zealand and the broader Asia Pacific (APAC).
“In terms of our strategic focus for both the Australian and New Zealand markets, this is to a large extent centered on driving greater awareness of our capabilities in the online retail and multi-channel retail space,” Sinisgalli tells SCR.
“We already work with many leading retailers in the region, the likes of Coles Group, Corporate Express, FashionBiz, GraysOnline, Fantastic Holdings Ltd and Super Retail Group.”
With the accelerating trend amongst many retailers in the region to more of a multi-channel focussed model, Sinisgalli says Manhattan Associates is particularly keen to increase uptake of its retail offering, Manhattan Zero Disappointment Retail.
“This system-enabled approach allows retailers to deploy advanced supply chain optimisation techniques to present a unified brand across all channels – traditional bricks and mortar stores, Internet, catalogue, call centre, television and mobile,” he says.
Sinisgalli points to a greater focus towards online retailing similar to what he has seen in other markets over the past few years.
“This trend has been fuelled by the strength of the Australian dollar, which has encouraged greater spending from a burgeoning Facebook generation keen to pay for products from the UK and US.
“In Australia this trend for foreign products is aided by the fact that online shopping spends below AUS$1,000 for imported goods are tax-free.
“When domestic retailers who did not have online channels highlighted this situation last year, it only served to alert those consumers who weren’t already shopping online of the savings to be found.”
“The dam seems to have burst and now even what I hear has been one of the biggest e-tail sceptics, leading retail chain Harvey Norman, has opened up online.”
As ANZ retailers start to understand the additional supply chain complexities involved in multi-channel retail, Sinisgalli
claims they will want systems that can manage them to best advantage.
“This is where Manhattan sees an opportunity to educate the market about its retail offering Zero Disappointment Retail (ZDR),” he says.
“The technology preserves and complements current systems and investments by aggregating inventory, order, pricing, promotion, merchandising and order execution information across all channels.”
Sinisgalli argues retail organisations across the globe are being challenged by the complexity of bringing cross-functionality to their many channels to market.
“To date, few have attained this ‘Holy Grail’ of multi-channel retailing,” he says.
“However, many are now learning to manipulate stock and orders across all the channels and fulfil from anywhere in the enterprise to improve customer service and margins.
“For example, more retailers are sourcing products from further afield, which results in longer inventory lead times.
“If demand drops off in one channel between the time a purchase order is raised and the inventory arriving, the retailer will want the ability to redirect that inventory to another channel where demand may be stronger.”
According to Sinisgalli, ANZ companies, particularly the larger ones, are getting much smarter about the way they manage their supply chains and are adopting ‘best practice’ techniques and using leading technology from Europe and the US.
“In particular, companies are realising warehouse management, labour management and slotting optimisation tools can offer a quick win, when it comes to order fulfillment.”
As retailers in ANZ develop their multi-channel strategies Sinisgalli expects demand will also grow for order management and order lifecycle management systems.
“These systems will help overcome e-tail’s franchise hurdle by enabling retailers to offer click-and-collect.
“Where previously delivering online orders direct to the customer’s home from a central website and warehouse robbed the franchise of sales, a click-and-collect service utilises the local store or franchise and the added value services they can provide – such as configuring a product.
“This will make franchise operations more relevant in a multi-channel retail world.”
To deal with the challenges posed by multichannel supply chain strategies, companies and in particular, retailers will require a solution that sits outside traditional supply chain systems.
“They will need a solution that aggregates data and integrates with the full distribution network – including all the warehouses, stores, in-transit inventory and vendors – to provide a consolidated and centralised view of inventory across the network.
“This will allow a retailer to respond, in a split second to a purchase request.”
Sinisgalli explains the software managing this complexity needs to be applied in layers.
“First it is important to lay a foundation where the retailer gains good visibility of inventory within its own warehouse and distribution operation, through multichannel enabled Warehouse Management Software,’ he says.
“This approach allows a multichannel retailer to operate under a single roof rather than in silos.
“Once the foundation is in place you can then introduce an extended enterprise system over the top to gain visibility outside the warehouse to the store network and to the ‘extended network’, including drop ship vendors and third party logistics operated fulfilment facilities.
“This will enable far clearer decision-making, giving the ability to maintain inventory in different areas and locations. “
Next in the process is an order management system to coordinate demand from multiple channels so it can be optimised across
inventory.
“This could include inventory in the warehouse, retail store, dot.com, inbound or with the suppliers,” Sinisgalli says.
“Importantly, the order management system provides end customers a view of their order regardless of how they’re currently interacting with the retailer, be it in a store, on the website, or on a mobile device.”
Distributed Order Management systems also enable cross channel processes, such as buy online and pick up or return to store.
In essence, retail organisations are faced with both a challenge and an opportunity.
“The challenge comes in the form of needing to ‘see more’ –
moving beyond the simple view of inventory held in high street stores or at the distribution centre, and widening the field of vision to encompass all the channels through which the company interfaces with the consumer,” Sinisgalli says.
“By being able to see – and make available for sale – as much inventory as possible, the opportunity presents itself to ‘sell more’.
“Those that ‘see more’ will ‘sell’.”