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The global e-commerce industry has received a major boost over the last few years, particularly due to heightened demand for at-home delivery and services during the COVID-19 pandemic.
Australia’s e-commerce market, in particular, has mirrored these global trends, as reflected by its current position as the 11th eleventh largest e-commerce market in the world, with revenue projected to reach US$32.3 billion by 2024. In its 2022 eCommerce Industry Report, Australia Post reported that online sales made up an impressive 19.3% of total retail spend in 2021, with 9.2 million households (81% of Australian households) having made an online purchase in 2021.
These are encouraging figures for Australian e-commerce businesses, yet as any business owner is aware, a growing market also means increased market saturation and stiffer competition. How then can Australian businesses keep up with the times in order to ensure that their market share does not shrink even as the e-commerce market as a whole continues to grow?
Australian businesses looking to stand out, distinguish, and differentiate themselves can start by addressing several pertinent challenges facing e-commerce businesses in 2023. With the right steps and strategies in place, companies can translate industry growth into business growth by staying ahead of the competition.
When e-commerce first started to gain traction years ago, its convenience and accessibility at one’s fingertips quickly overshadowed the existing advantages of brick and mortar stores. Though consumers are now more familiar with how e-commerce works than ever in line with the massive growth of e-commerce, their expectations for the ‘ideal’ online shopping experience have also evolved accordingly over the years.
Many consumers now expect shorter processing, waiting, or delivery times once they’ve completed their purchase – even if these factors don’t fall directly under the e-commerce platform’s purview. Australia Post’s 2022 eCommerce Industry Report even highlights growth in click-and-collect services to 13.6% between 2020 to 2021, suggesting more customers are opting for in-store collection or pick-up over delivery due to convenience and immediacy.
As such, businesses may feel the pressure to keep up with or even cater to rising consumer expectations in order to distinguish themselves from the competition.
E-commerce has become an important part of B2C and B2B transactions alike. However, e-commerce businesses are now facing increased competition from direct-to-consumer (D2C) platforms that are adopting online shopping services to their own advantage.
In D2C, brands sell or distribute their products directly to customers via their own platforms and channels, such as the brand’s own website, social media, and digital apps. Rather than going through third-party marketplaces or resellers, renowned and recognisable name brands across multiple sectors are using D2C sales to retain customers, strengthen brand identity, and build exclusive brand loyalty.
E-commerce businesses with a focus on reselling or supplying name brands thus face the possibility of a shrunken or irrelevant business model, as brands seek to take advantage of e-commerce strategies on their own terms.
Consumer preferences are also shifting to embrace multi-channel retail that combines online and in-person aspects of the shopping experience. The main benefit of multi-channel e-commerce for the consumer is its ability to offer personalised shopping experiences in an instant, which in turn strengthens brand recognition and loyalty.
However, for multi-channel strategies to succeed, businesses must be prepared to commit to greater data integration and smoother information exchange across their platforms and product streams. For example, inventory levels and prices should be consistent even across different channels, so as to not mislead customers or affect your own warehousing capabilities.
Businesses can take advantage of technological advancements such as retail management or order management software to ensure a consistent user experience across their channels. While this may entail several upfront or overhead costs, the benefits of a well-organised product inventory and smooth order and fulfilment system are manifold when it comes to ensuring customer satisfaction.
The growth of the e-commerce industry has been a double-edged sword in certain aspects, giving rise to major problems regarding cyber fraud and vulnerability to cybersecurity risks.
As digital scammers become increasingly more sophisticated in their methods, even the sharpest of consumers might find themselves unknowingly scammed or having their personal data compromised. Businesses themselves may even face digital attacks, which could severely impact their day-to-day operations, or even cause them to need to shut down.
E-commerce businesses need to be proactive in both protecting their own data security, and ensuring that their customers’ confidential information is kept secure as well. In the event of data breaches, businesses should also be prepared to take swift and immediate action to mitigate the damage done – or risk losing their customers’ trust and affecting customer loyalty in the long run.
Another notable challenge e-commerce businesses will have to contend with in 2023 is the increasing complexity of export challenges, especially in cross-border transactions. As highlighted in the 2022 DHL Export Barometer Report, these include growing freight costs, general inflation, and global supply chain disruptions – all of which can deal a severe and unexpected blow to small and medium e-commerce businesses.
Australian businesses will have plenty of complicated and multi-faceted problems and obstacles to navigate in the year to come, ranging from improving their cybersecurity to ensuring a consistent customer experience across multi-channel platforms.
E-commerce businesses can transform the challenges highlighted above into opportunities for business growth by partnering with efficient, expert, and reliable logistics partners such as DHL Express.
As a global leader in logistics and last-mile delivery, DHL Express is able to offer businesses and consumers greater variety in last-mile delivery and fulfilment, with value-added services such as providing help with customs duties and taxes. This allows businesses to better cater their products and services to meet the personalised needs of customers, affording them valuable opportunities to strengthen their brand recognition, build brand loyalty, and increase their market share even in a competitive environment.
Open a business account with DHL Express today and learn more about how we can help keep your business running smoothly throughout the good times and the bad. Discover more global e-commerce and logistics trends online today, including six export trends to help you develop your business growth plan in 2023 and how FTAs can help Australian businesses looking to enter APAC markets.