Study: Australian Businesses Unprepared for Online Age

Australia

Australia (Photo credit: Kenny Teo (zoompict))

Australian manufacturing and wholesale distribution sectors are lagging behind in Ecommerce adoption, with only 10 percent of companies currently able to receive orders directly over the Internet.

A Frost & Sullivan study showed that despite strong optimism about their prospects for growing the Ecommerce channel, almost 75 percent of businesses viewing it as an opportunity but are unprepared on how to handle the growth.

It revealed that businesses in these sectors see the opportunities and benefits that Ecommerce can offer, particularly convenience for customers, reduction in distribution costs and linking customer orders directly with central business systems. While 76 percent of respondents envisage that customers will increase online ordering over the next few years, ordering direct from their websites is much less common than in the retail sector, with most currently only receiving orders via e-mail. Businesses still identify a number of challenges that are keeping them from adopting Ecommerce, including losing direct relationships with B2B customers, system integration issues and the feeling that they need to offer lower prices online.

Currently, only a small percentage of B2C consumers are able to order directly from wholesalers and manufacturers online. Over three-quarters of businesses expect to increase their online ordering from suppliers, citing quicker and easier ordering processes, access to a wider range of suppliers, less paperwork involved and lower prices than other channels as the top reasons.

Social Media Broadens Communication Channels with Customers

The study also indicates that adoption of social media as a communication channel with customers is increasing, with 30 percent of manufacturing and wholesale businesses now having a social media presence. Looking at manufacturing specifically, while take-up of social media is low compared to other sectors, it has doubled in the past three years to almost 15 percent. For both sectors, however, telephone and e-mail remain the dominant communication channels.

Integrated Software Platform Overcomes Challenges

According to the research, a major challenge faced by many Australian manufacturers and wholesale distributors with a web presence is a lack of integration between their web front-end and internal back-end systems, with less than 20 percent having automated links. Respondents cite a lack of integration as a major issue for exploiting Ecommerce, followed by a lack of systems to service customers that cross between online and other channels, as well as a lack of systems that connect inventory to online sales channels. Without a unified software solution, these businesses face difficulties in maintaining a consistent brand experience in areas such as customer support, pricing, as well as increased operational costs to run and maintain each channel.

Implication

As the online environment accounts for an increasing proportion of overall sales, getting an omnichannel strategy right can deliver substantial and tangible results, but it can take years to develop. This is where cloud computing really opens doors, offering the opportunity for a lower cost and much lower risk rollout of the software needed to support an omnichannel strategy. With it, businesses can unify separate channels to provide a single view of the customer, sales and revenue.

From: NetSuite, Inc.

BLM Implication

Australian businesses may need more government lift to assist in the adoption of technology, as espoused by Porter’s Diamond of competitiveness. The inertia in adoption will likely cause the entire country to be less competitive as a whole, with market share loss due to the lack of adoption of the online medium. It is critical for businesses to lobby for support in this respect.

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