We're gonna spend about half an hour talking about what's happening in
e-commerce one of the big trends what are you seeing what do you guys as
sellers need to be aware of so we're really going to talk about three things
we're gonna have a bit of a talk about what's happening in the market from a
growth perspective we're gonna do a little bit of worldwide we're not going
to spend too much time what's happening in the world we're also going to talk
about the five or six big trends that are really playing out in the market at
the moment and then if you want any or more of this information I'll show you
where to go and get it as we go for it sound like a plan yep
Tim's very hard to follow so I'll be a bit duller I think all right so this is
what's happening in ecomm. So I've been looking and working in the air commerce
industry now for probably eight nine years and when I used to come and do
these presentations we talked about 17 billion 14 billion in terms of the
market what we're now seeing is massive growth last year was the strongest
growth we've ever seen 19 percent was what the e-commerce growth was last year
and we're projecting that the market will grow by another third taking us out
to 2021 now I'm really privileged from a ecommerce perspective I see most of the
parcel so we have about 80 percent market share so I can tap into a fair
bit of data to try and predict what's happening out and also what's happening
for each year we also mirrored that up with what we see from the National
Australia Bank so it gives us a really good insight to what's happening in the
market so Amazon came in last year not a huge effect but from the domestic point
of view the sellers who are selling domestically fundamentally drove out
that growth so 2017 19 percent growth coming out to 30 billion in five years
time so that's a third extra another 10 billion into our industry in the next
three years now put that on context though from a global scale perspective
we're still quite small so 2018 looking about three point six trillion and these
are in Australian dollars not US dollars and for 2021 you're looking at about six
trillion so from a global perspective it's massive now historically where do
we think Australians might have bought from so if we start to think about
buying from overseas what are the three countries and I like
to ask you guys questions okay what are the three countries do you think
Australians currently buy from when they think about buying overseas and actually
one in third transactions do go overseas and anyone like to take a guess China
yep number three on the list UK in the u.s. yep number number one and number
two currently we if we go back four or five
years we've predominately bought out of the UK in the US China has been going
through massive growth and they're sort of about 30 percent of the market now so
we're sitting almost getting to a point where it's a third of China third US and
third UK who would like to tell me what we what do you think we buy from the US
any ideas very quiet great closes one yep and there's another one we buy a lot
of out of the US no books out of the UK actually cosmetics cosmetics and beauty
and health comes out of the US memory typically by I gave you one hint for the
UK which was books fashions the second one from from the UK and the third thing
we get is out of China so what do we think we buy out of China cheap shit
yeah cheap consumer electronics is what we buy out of China if you ever get the
privilege to go into one of my international gateways look for the
little black envelopes it's too cheap Chinese shit and there's lots of it so
from an import perspective out of China you're seeing anywhere between 40 to 80
percent growth a year on year and my volumes so you're getting massive growth
that cheap two-dollar stuff coming out of China so historically when we think
about e-commerce it has been a Western dominated environment it's been the UK
it's been the the u.s. it's been Western Europe fundamentally that's changing and
we've been talking about the big change for a number of years and we've been
talking about why Asia is suddenly becoming the powerhouse for e-commerce
and we're privileged where we're part of Asia but Asia is going to be the
powerhouse of e-commerce anyone like to take a guess why we think Asia will be
the power spike China but the largest Asia and Southeast Asia why is it likely
to be the powerhouse of e-commerce
someone said middle-class yeah yep 66% of the middle class will be in
Asia two-thirds of the world's middle class will sit in that region
now there's three reasons that you buy online price range and convenience but
anyone want to give that the marks are going really well today anyone want to
give me a guess of or give me an idea of something they bought online that they
needed recently come on everyone would have bought something in the last week
online what did you buy that you needed online books no next that's what you
bought but you didn't really need it you've on screaming hit me say yes I
really needed that book Ben come on anything else
yep groceries yeah so food is probably the best indication most of the stuff we
buy online is discretionary we'll talk about what strains buy online but most
of online is discretionary it's fashion its books its wine everyone else I said
wine probably would have put their hand up but fundamentally you need a middle
class and you need discretionary income to have a strong e-commerce market so
with 66% of the market for middle class he's going to sit in Asia fundamentally
that's a huge buying opportunity for us and a selling opportunity too so let's
took take a bit of a deep dive into Australia and think about what
fundamentally we're doing from an Australian perspective at the moment so
these are the big trends that are playing out in our industry and I hope
to take it from a new consumer side I'm also going to take it from a receiver
sykes I think both are important that you understand and think about how these
things are impacting your business so they start with the rise of the sale
from a retailer perspective who was on click frenzy this year hands up if
you're on click frenzy who did a cyber monday Black Friday event yeah who did
Boxing Day sales yeah cool we've seen this massive rise of the sale who's a
country road member yeah a few Tim what do you do do you how often do you visit
country road okay oh I'm Paul T man I won't I'll ignore him then someone over
here from a country road membership if no one from country I'll go back to
Tim Tim there we go they're all gone quite on me
what you remember how often you visit country right and why do you go into
country road close Tim do you get the spin you know you wouldn't know do you
get the spin 300 get $100 discount yeah well there you go
Tim's wife gets the $300 $100 discount but country road do this spend $300 get
$100 discount the only time they get a massive growth is when they do that sale
so we saw click frenzy we saw 25% growth cyber monday Black Friday weekend 27%
growth and when you then put on top of that boxing day 32% growth you've seen a
huge concentration of sales and the effect of that sales has so think about
what that affects on your industry how do you do that you've got a massively
stock up you've got to think about your margins you've got to think about how
you're going to meet your supply chain but we've now trained consumers to
really think about online as a sale so massive impact on the industry massive
impact from a freight provider perspective but also a massive impact on
you guys are sell us so the sale is having a huge effect on us and look we
there's been a lot of conversations but Prime from an Amazon perspective we'll
be here probably in the next six months if not earlier and you end up with prime
days again massive days from a sales perspective so it's becoming very
important from a retail perspective to think about how and what your sales
strategy is personalization Tim mentioned maaan purse tiny me Shoes of
Prey if you're if you've getting a personalization of a product you
fundamentally getting larger growth than you in the standard competitors it's an
interesting phenomena but if you get a consumer emotionally involved in the
design of the product you get a higher conversion rate so you're starting to
see 30% growth in that personalization category and it's just not
personalization of the product is also the personalization of the experience so
take the opportunity today to go and visit the guys out on the showroom and
talk to them about how you should be personalizing your shopping experience
what you should be showing to consumers when they're fundamentally looking for a
shirt what we show them will you show them shoes
will you show them the belt that goes with this year people like you bought
this been all that type of stuff is fundamentally coming last couple of
years and you're seeing it can into the conversion factor so when we talk to
retailers retailers who are doing that
personalization and getting much higher conversion rates the other big impact is
marketplaces Amazon came last year we know that they launched in that November
period it was a back according to the press it was a bit of a flop the prices
weren't where they needed to be the range wasn't there where it needs to be
but if you go back to Amazon in Canada if you go back to Amazon in the UK seven
years ago it was the exact same launch they started soft and they do this
everywhere they go they start soft and they build so what we shouldn't be doing
is comparing Amazon in Australia to the US Amazon now we should be thinking
about what Amazon's going to look like in seven years time five years time
they've operating out of their single warehouse in Melbourne they've announced
that their new warehouse in Sydney which is near Liverpool and that's important
as we talk a bit further on he's going to be open the next couple of months so
within what's at six months they've now got two large warehouses operating in
Australia and they'll just continue to build stock lines they'll just continue
to build the marketplace eBay traditionally has been about 25 percent
of the overall market Amazon on top of that stru historically when it's been
coming from overseas it's been about seven percent of the market so between
two big marketplaces in Australia or well above 30 to 33 percent of the over
or e-commerce sales are having on those two marketplaces so as a sell-off
what is your marketplace strategy how are you thinking about marketplaces
catch of the day Maya or invested in marketplaces over
the last recent period of time and when we look at marketplaces you're getting
seventy percent growth of transactions on marketplaces so again a massive trend
around a consolidation of buying power into small not small into single points
of um ecommerce so marketplace is very big effect in terms of how you doing and
then cross broader trade we talked about the the increase in China we talked
about how one in three transactions now go overseas and you're starting to see
that growth continuing happen everyone would be know that
you've got the GST coming in the 1st of July so overseas imports will be having
to attract a 10% GST that might give some price parity however if I look at a
pair of so I recently looked at the backpack I've got a gopro and looked at
a backpack for a gopro buying it from amazon australia $230 buying it from
amazon u.s. $66 free delivery so the 10% that amazon might charge me
for that $66 coming back fact from overseas he's not going to get me to buy
from Australia so yes the GST is coming in but
cross-border trade is also something to think about in terms of how you're going
to go overseas and how you're competing against that overseas so let's talk a
little bit about what's happening I'll push the right button there we go what's
happening from a receiver point of view so the most important part and I'm now
unbiased because I'm the freight guy but the most important part of my opinion
one of the most important parts is when the consumer opens up the parcel now
it's the only physical touch point you might have from an online experience and
you have some really good examples of people who are doing that brilliantly
think birdsnest with their handwritten notes and the experience abouting open
up the box you think about what eb games do with their packaging creating a real
experience about the box but fundamentally how that box gets
delivered is going to change and as sellers you need to think about how that
change is going to impact you and what you're going to do who thinks drones
will be delivering parcels in 3 years time couple yeah drones are delivering
parcels today there's a trial being going on in Google in Canberra today
delivering parcels who thinks drones will be the standard delivery in 3 years
time yeah so my calculations suggest that if you need to do drone deliveries
for a standard Australia Post deliveries so to give you some level of con
information we did just under 3 million parcels on our busiest day before
Christmas standard day for us nowadays is somewhere between 1.2 to 1.5 million
parcels a day you would need typically over sydney you'd need 50,000 drones
through that standard delivery if you put them in standard deliveries I don't
think Casa is going to allow me to fly mm drones over Sydney delivering parcels
every day but you will start to see drones and and our CEO was in the press
today you'll still will start to see drones for urgent delivery think medical
supplies think pharmaceutical think drugs think Bloods so fundamentally
drones will be part of the experience but are we based around speed speed and
urgency but what will have a bigger effect is actually with the automation
who thinks driverless cars will be here in the next three years did anyone see
that the guy out of the UK got convicted for driving his car sitting in the
passenger seat anyone see this story a guy on the UK got into his Tesla sat in
the passenger seat and pushed work he got really upset when the police pulled
him over and took his license away Friday months because he was sitting in
the passenger seat so driverless cars are here today we know that he did say
when you're they asked him why you're doing yourself one's doing it well I
thought I'd have a go at it too but fundamentally you can see a day where
the last mile was being delivered by automated vehicles in a very very crude
way think about a parcel Locker sitting on the back of an automated vehicle how
are you going to create that experience that you want from your locker from your
delivery perspective when you start to have that right what's going to separate
you and differentiate you and the big trend that's been happening over the
market is speed who's sending their product same day at the moment anyone's
doing same day yep who's doing next day a lot more hands who's just doing
standard delivery at the moment yeah we're seeing a massive rise in speed and
all our research has always said the consumers not prepared to pay for speed
if you give them free standard delivery however that seems to be changing cotton
on rounder trial recently when they said free delivery on standard pay $2 and
you'll get expressed and they saw in the region of 50 60 percent growth so speed
is becoming a huge differentiator from embarking in perspective yes it's the
same product yes it does get to them so speed is very critical 40 percent growth
and Express post at the moment so you've got to start thinking about how you're
doing speed and what options from a delivery perspective you're giving to
your consumers consumers are starting to demand
food and starting to understand that speed is important for their delivery
perspective so there's some of the big trends that are playing at the market so
number one for me from a from a receiver point of view think speed how are you
thinking about you did every choice is how you thinking speed from a consumers
perspective really start to think about how you're doing your personalization
how are you trying to drive up your conversion rates so they then talk about
what Australians are buying this is 2017 data for the full calendar year you can
see the growth rate for online as a whole is nineteen point two percent so
massive growth that's the biggest growth we've seen in the eight years that we've
been tracking e-commerce fashion is the number one thing people buy online
clothes shoes apparel is the number one thing we buy online what you're looking
at there is the the pie charts below give you the share of online purchases
and the percentage above is the growth rate so fashion grew by 27% and I know
it says there it's only twenty six point five percent of the overall share but
then think of the variety stores so that's things like catch things like
David Jones my Amazon eBay where you basically go to buy a variety of
products I would contend that most of what you're buying from those is also
fashion so fashion is definitely getting massive growth and is the number one
thing we buy online and you can see the growth rates of the rest of the
community there so home wares and appliances 10% health and beauty 13% and
all the way down unfortunately if you're selling one at moment the markets flat
so predominantly fashion and thinking about how you're doing personalization
of fashion is even more important now these are the top spots of where people
buy fashion so when I start to think about localities are rare people are
buying fashion and Australia needs to the top 10 and I've mentioned previously
Amazon's just open up in a warehouse in Liverpool levels the number one place
not only just buying fashion but also very high in overall e-commerce in
Australia for e-commerce think about Amazon open up a warehouse
lovely ability to do same-day delivery starter their warehouse to the number
one spot Australia buying online what you can notice though against those
postcodes is they tend to be slightly more removed from large metropolitan
shopping centers so typically the sort of the outer outer areas and they're not
too far out but the areas outside that don't have access to large-scale retail
tend to be a little bit more online it's reasonably common sense so you can see
Liverpool point cook and to Humber in Queensland are the top three spots that
are buying fashion online so if you're starting to think about how your
marketing so let's say you are selling fashion or let's say you're selling
books if you're starting to think about how your marketing campaigns need to go
what are you doing to target areas that have a high predisposition to buying
online what can you do to capture your share of the Liverpool market so I'm
going to have some time for questions but if you do want any of that insight
or any of that data there's two ways to get ahold of it we've got a couple of
the Australia Post guys doing presentations over the next couple of
days go and have a listen to them we've also got a copy of the full report at
our stand visit the stand or if you'd like to take a photo you can get it
online but just in conclusion we're getting massive growth in e-commerce at
the moment nineteen percent it is all fashion driven you're also getting a
fair bit of cross-border coming through and the concept of the sale is really
important how are you thinking about yourself
so if they're the kind of massive trends that we're seeing playing out of the
market so I'm happy to do questions I think we've got about five minutes or so
for questions if we'd like so happy to do some questions if anyone would like
to ask the question at all yep do you have data about mobile and desktop
devices like this year sure you know people are shopping on on the phones and
so definitely the the the data still says from a mobility perspective
everything has to be on mobile they still will search and they'll do their
investor nations on mobile and then they tend to
buy on the tab of the horse or buy on the PC still I still think a lot of
people buy when they're at work so they're seen in front of the PC doing
their shopping without work but mobility is very important from from a search
perspective so if you think about every time anyone gets a try and everyone
every time someone's got a down moment in their lives they're really doing
three things on the mobile they're doing social media and Tim made the joke about
tinder is previously that's definitely a high on the social media agenda they're
doing watching movies playing games doing it attainment or they're actually
doing browsing around shopping so mobility is very important it's
definitely a growing device to purchase but it's still not the dominant purchase
area do you know any like growth numbers sorry sir do you know any growth numbers
like past year what's the last growth number I saw said mobility was growing
up around 80% in terms of transaction size right and Android users are our
u.s. yeah I don't get a separation between Android or iPhone it's just a
combined yeah thank you it's very quiet audience this year yes
last year at this event someone asks a question as far as imports so when we
selling here in Australia often it costs us a lot more to send parcels to w-a and
you happen to mention that the prices are coming down in January I think you
said that occur and - what percentage yes the process for us sending overseas
did occur I can't remember the exact define it's a question we always get in
terms of and I mentioned it why do you buy cheap two-dollar stuff and they seem
to be able to send it for free from China compared to me sending it from an
overseas perspective I can't remember the exact number that the prices came
down and I can't reason why that the variation is there so fundamentally the
variation between why someone's sending something out of China to send him into
Australia compared to me sending it back to China there's three reasons the first
is I can't tell you how much the Chinese merchants actually subsidizing the
shipping just like you guys do free shipping a lot of the Chinese merchants
substyle shipping the second reason is I can't also tell you how much the China
Post is through their government and everything else is subsidizing the
industry so there is government subsidies the China Post prices are
controlled from a government perspective so there is a sort of a potential for
them to be subsidizing some of that sending and the third one is I actually
get paid less for an article that I deliver from China then an article I get
delivered from the UK so we're part of the overall Postal Union upu they set
the prices from a global perspective they said how much I'll get paid from a
China perspective so being part of the community of postal unfortunately I
don't get paid for the work effort associated with delivering a parcel from
China now that's going up so we have had that address this year and it gets
addressed again next year and I guess we just see you later better we'll take
sort of three to four years for that price to your friend she'll catch up I
think there was a Chrisman right up the back he might have to run
now we're the Knicks one is we've got a three or four minutes one down here as
well yep cool sorry Josh you're going all the way up hands up mate right on
the back here we go he wasn't right in the back row but he was pretty close
today look just wondering if you had any stats
at hand on terms of ship stir and so obviously we've got subscription
services available now how our customers responding to that are you finding that
if they are subscribed they stay with those retailers yeah so the information
from ships are in it it's a small consumer pool at the moment they become
four times more likely to buy from a merchant if they're in a subscription so
there's definitely a rise in the online spending habits there's actually a
gentleman from our ships the team at the stand today and be there tomorrow so go
and have a chat team if you're interested in ship stuff ship stuff from
our point of view is I shouldn't say it but it's essentially Amazon Prime from
an Australia Post perspective so how do we bring a group of Australian retails
together to be able to let them do a subscription-based model to consumers so
yes the you get substantially uplifting the consumer experience from a buying
perspective and you do get our higher loyalty back to retails but you got to
remember it's in your Novation files for us more than anything else yeah
one more question Ben Josh I think it's just I think there was a guy just headed
up to to down someone have a question over that side go on yet there it is
nope yes no sold yes would you end up there we go
also quite up the back
so fulfillment by Amazon is a thing that's available in Australia now yep
the fulfillment by Amazon prices that they charge for peak pack you know all
the packaging costs their profit the whole lot and the postage to anywhere in
Australia is dramatically below what any of us can get prices from you
so you've clearly given them as Australia Post a rate that the rest of
us even reasonable sized retailers can't get anywhere near how are we supposed to
compete without going to FBA and so so Bob is he not going to share the
commercials of Amazon with you but what I can tell you is their rate is
equivalent to their size so fundamentally there are retailers in
Australia that have paying cheaper for delivery than Amazon based on their
current size so what you see as a FBA rate is not
necessarily what Amazon is paying me for shipping so if you think about that
Amazon is going through a growth strategy and they are fundamentally
subsidizing through their market commissions or their own inventory the
ability to try and capture volume onto their website
Cyprian strategy that's what I would do if I was mr. Amazon and they've got the
ability to do it so they're not too concerned at this stage about how their
profitability looks they're fundamentally again this is my
perception only they're fundamentally in a growth market phase so yes they get
good chipping they do reasonable volumes but no they don't get a subsidized rate
from us ladies and gentleman please put your hands together for Australia Post
diamond sponsor Ben frenzy thank you Ben
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