NZ's missing out on $36b e-economy potential

NZ's missing out on $36b e-economy potential

New research shows international retailers are chipping away at New Zealand shoppers’ consumer spend, but Kiwi companies finding a way to effectively harness the power of online retailing could add another $34 billion to the economy.

This potential upside for the economy will be a reality if low-use internet firms make the passage to become high-use internet companies, says Cate Bryant, executive director of Ecommerce NZ, citing an extensive research study by consulting firm Sapere Research Group.

New Zealand retailers, Bryant says, are missing out on potentially big dollars because 41% of online shopping done here disappears overseas. According to data compiled by Nielsen, Kiwis spend around $1.3b annually on overseas retail websites in the US, UK and Australia.

Latest data produced by BNZ shows that domestic retail purchases grew 5% on-year in July while international retailers grew 11% during the same period.

Although online shoppers going offshore are driven by range and cost, there is also a level of sophistication missing in NZ that is offered by overseas retailers, she adds.

She points to The Iconic, Australia’s online fashion and footwear retailer, which has a stated policy of delivering within three hours, providing an appealing customer value proposition – and which Kiwi e-tailers would do well to emulate.

Using the internet can make a stark difference to a company’s productivity, according to a March 2014 study, “The value of internet services to New Zealand businesses” by the Sapere Research Group.

Internet-savvy companies are on average 73% more productive than those who are not, although the average may differ across different industries, the study says.

Those that use the internet for online sales are up to 25% more productive than their peers’ in the industry.

Firms that have all or almost all of their staff online are up to 16% more productive, while those with a fibre connection are up to 12% more productive.

Although New Zealand companies are typically hooked to the internet, most use it for finance functions (90%), around 75% use the internet for government-linked transactions (GST and other tax processes) and the same percentage use it for procurement of goods and services.

Only 45% of NZ companies use the internet to receive online orders in 2012, and most of that was through email. 

Some 11% of those surveyed reported that online sales contributed 10% or more to total sales.

Only 12% of the companies surveyed online payments.

Despite the excitement about online shopping, sales online make up only 6% of total retail sales currently.

The recent Yellow SME Digital Readiness survey showed 50% of Kiwi SMEs don't have a website. 

Retailers who want to experience the power of many using the internet, will come together on Click Monday to drive online sales within NZ, working together with NZ Post to offer discounts for parcels sent.

"Click Monday holds NZ’s biggest online sales days, based on the legendary Cyber Monday event out of the US.  Clickmonday.co.nz is a centralized site that showcases brands and offers from New Zealand retailers across many categories. Users find an offer on site and then click through to the retailer's site to make their purchase,” says Bryant who is the spokesperson for the organisation.

Click Monday was first introduced last year, bringing together 84 retailers who experienced collectively over 300,000 “clicks” on their online stores, generating $2.5m  of sales in one day, she says.

“This was an uplift of 4 to 10 times for retailers involved.”

Click Monday will be held on Sept 15 and Nov 24.

Internationally, events like Click Monday have become highly significant retail events. 

"In China last year, a similar event delivered more than US$5.75b of sales. Click Monday is here to grow sales for New Zealand retailers online, and we hope that by raising the profile of online shopping, more local businesses will see the opportunities that lie beyond New Zealand’s borders as well," Bryant says.