Deck the Web with boughs of holly

If the analysts are to be believed, then this will be the first Christmas season to draw Australia's Yuletide crowds online in significant numbers. Market analyst Gartner Group has predicted that in the current quarter, Asia-Pacific consumers will spend $US1.6 billion (more than $A3 billion given the exchange rate at time of writing) online, almost double what they spent in the final quarter of 1999.

With more than half of all Australian homes now having a personal computer and more than a third of homes having Internet access, the eventual embrace of online shopping was inevitable. That this might start around Christmas time is perhaps not surprising.

Australian consumers, however, continue to approach their online shopping adventure cautiously.

The Australian Bureau of Statistics reported in September that only 6 per cent of Australian adults had bought anything over the Internet by May of this year, which was up only slightly from the 5 per cent of the previous year.

Yet when Australians do take the plunge, they find e-shopping quite satisfying. According to www.consult's ninth Australian Web survey, 81 per cent of online shoppers reported being fairly or very satisfied with the experience.

The ABS, however, shows that this satisfaction is only applicable to 6 per cent of the population. The trick for retailers is to entice the remaining 94 per cent of Australia's adults into the online bazaar.

Most of the attention related to e-commerce thus far has focused on business to business systems which promise corporations grand rewards for conducting their business online. Business to consumer e-commerce, by comparison, has been seen as an expensive experiment promising only a trickle of revenue.

Ultimately, however, the business to business commerce chain links up to the consumer, and the smart corporations will explore how they can exploit an online connection with their customers.

What might lure more consumers into the online marketplace is the emergence of sites and services which make the online shopping experience more rewarding than a conventional traipse through a mall. One such development comes from coshopper.com, a service which allows consumers to aggregate demand in order to secure discounts.

Purchase aggregation is not a new idea; just ask any extended family which bulk buys its toilet rolls and then divvies them up among the family members. It is an old idea being recast for the online environment. Being online means that the extended "family" making the purchase does not have to be based in a single city - members could theoretically be based anywhere in the world, coming together into a virtual purchasing unit which wants to buy, say, a job lot of 144 mobile phones and take advantage of discounts negotiated by the purchase aggregator for buying in bulk.

It is developments such as this which will invigorate business to consumer commerce on the Internet.

In the past, online vendors have hung out their Web shingle and waited for custom. Yet they have only occasionally offered prices significantly cheaper than the shops, there has often been quite high associated delivery costs, there have been no guarantees that the order will be fulfilled when the supplier says it will, and there have been few loyalty rewards offered.

When consumers switch their purchasing habits there is generally a good reason. If they buy books or toys from catalogues then it may be because there is a loyalty reward which will be funnelled back to the school or preschool which distributes the catalogue, and the consumer feels the purchases benefit the community. If they are prepared to give up an evening to attend a Tupperware party, it is because the quality and longevity of the product is superior to that available in the supermarket. If they buy wine over the telephone from the cold calling salesman it is because there is a discount being made available based on the stocks in the retailer's cellar, and it can be delivered quickly and cheaply to make room for new stocks.

Gradually, the online retail community is cottoning on to the first principle of selling: when consumers are offered something useful, valuable or desirable, then they may want it.

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Beverley Head

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