News

19 Feb, 2019
Ditching the digital transformation
The Sydney Morning Herald

Being a digital business is just a part of doing business according to Jen Geale, the co-founder of Mountain Bikes Direct.

Geale and her co-founders started the online bike business after running a local bike shop in Brisbane.

"We saw people shopping on line and we wanted a piece of that pie," she told the Oracle and Netsuite Suiteconnect conference in Sydney last week.

Mountain Bikes Direct has operated online since it first launched in 2012 and digital transformation hasn't really been on the agenda.

The business turns over more than $4 million a year and employs 14 staff who all work remotely.

"The shift we have seen is of our customer base to research digitally before they engage our sales people," says Geale. "We see 70 per cent of customers have researched the problem beforehand. For us it is about using technology to assist us reaching our customers where they are making a decision."

Buzz words

Business is digital now, whether operations are purely online or as both a physical and virtual businesses according to enterprise software company NetSuite.

Jason Maynard, senior vice president of global field operations at Oracle Netsuite says phrases such as 'digital transformation' are outdated.

"I don't even know what it means anymore when someone says digital transformation," he says. "The tech industry is so focused on these buzz words. We are not using the words digital transformation," he says. "We have been in the cloud since 1998 we have 16,000 customers we are not really transforming to be digital, we did it 20 years ago."

Maynard says Oracle NetSuite's customers, which include many small businesses such as Mountain Bikes Direct, are also beyond digital transformation.

"I think as tech vendors we are all guilty of the shiny object syndrome to hype things up as the next big thing," he says. "We are all trying to solve business problems, these are human problems how do you hire a great team … how do you grow the bottom line. Don't get sucked into these buzz words."

Digitally native

Fresh food delivery service YouFoodz is another business that has relied on digital channels from its inception.

The business sells healthy food via home delivery and through retailers and has experienced 500 per cent growth in the past year with a turnover of more than $100 million.

Chief technology oficer Myles Lawlor says the technology used to make tens of thousands of meals every day is "incredibly complicated".

"To scale it, I am getting some grey hairs, a lot of grey hairs," he says.

However Lawlor also avoids phrases such as digital transformation.

"I am one of these guys that hates the word digital because it takes away from all the work everyone is doing in the business," he says. "We assume it is a thing rather than a way of thinking. When we talk about digital we say that is listening to the customers. We are obsessive about listening to the customers."

Brisbane based YouFoodz was founded by Lance Giles six years ago and Lawlor describes the business as a "digitally native company".

"It is a young business both in age and some of the people who work here are constantly delivering new functions and new marketing mechanisms," he says.  "But ultimately it is all about the food."

19 Feb, 2019
HSBC Australia appoints new head of retail
Image via Investor Daily

HSBC has appointed a new head of retail banking and wealth management effective immediately to help build a bigger retail presence. 

Jessica Power will be part of the banks efforts to increase its presence in retail banking by assisting domestic and international customers with their mortgages, bank accounts, credit cards and other financial needs. 

Ms Power has over 23 years’ experience in the industry, most recently as state manager metro NSW for Westpac. Prior to that, she worked at Citigroup Australia for 19 years in various roles. 

Ms Power replaces Graham Heunis who has taken on a new role as head of Asia-Pacific sales management, retail banking and wealth management. 

HSBC Australia’s chief executive officer Martin Tricaud said that under Ms Power’s leadership the bank would see its growth efforts come to fruition. 

19 Feb, 2019
Catch Group: Expanding online, learning from offline
Inside Retail Australia

Catch Group chief executive Nati Harpaz believes Catch’s half-yearly figures posted yesterday “speak for themselves”.

“We’ve had an unbelievable six months from July to December which beat even our most optimistic forecasts,” Harpaz told IR.

Much of the 62 per cent sales growth is due to Catch’s execution of its marketing strategy, as well as the growing range of products available to customers across its online marketplace.

“If your range is 40,000 products, you might be giving your customer a reason to shop with you once or twice every 12 months,” Harpaz said.

“[But], when you grow that range to two million products, for example, all of a sudden that customer…has a reason to come back more often and shop again.”

Harpaz said the increased product range also means Catch is losing fewer customers to its competitors. Active customers jumped to 1.36 million at the end of the second quarter in FY19 – 54 per cent higher than the same quarter last year.

The company has launched several new marketing initiatives over the past six months to introduce its offering to new customers. One of the biggest was the opening of a physical pop-up store at Chadstone shopping centre.

“Initially, when we looked at [the store] we thought about how we could make the experience very digital, allowing self check-out and integration between online and bricks-and-mortar,” Harpaz said.

“But we realised during the [holiday] period, you just want to make it very, very easy for customers to grab the product, pay, and leave the store. No one wants to spend time widgeting and playing around with things.”

As the weeks moved closer the Christmas, Catch focused on reducing friction in the shopping experience and expanded the size of the store to stock more product and offer more checkouts and customers into the space.

While the initial Chadstone pop-up closed, Catch has signed on to relaunch the store, in a smaller capacity, within the centre for another six months.

The new store will offer click-and-collect, but it will be more focused on curation of stock, featuring the best products from online and deciding if they will also sell in a bricks-and-mortar environment.

“Choosing the right stock to be on the shelves makes a difference. Usually a retailer puts something on the shelf and it’s stuck there for months until it sells,” Harpaz said.

“We have the luxury to be able to pull things that don’t work out, on a daily basis, put it in the warehouse and replace it with other products.”

Catch Group’s 22,000sqm warehouse, opened in october of 2018, will be a key component in the second half of FY19, enabling the retailer to hold more stock, and therefore, allowing Catch to improve its in-stock range moving forward.

Additionally, while Catch Marketplace has curated its range down to a more manageable 1.7 million products, the group has plans to grow that number further.

“Marketplace can grow into millions of SKUs, but it has to be the right SKUs,” Harpaz said.

“We want to be differentiated by the other marketplaces by making sure that what we put on our site is very relevant to our business.”

Further incentives to Catch’s membership program, Club Catch, are in the pipeline as well, as the brand moves closer to hitting $1 billion in sales – a challenge for the business set by Harpaz several years ago.

“We’re getting closer, probably the fact that we took Scoopon out of the business made a change [but] we are really on track to grow significantly over the next 12 to 24 months,” Harpaz said.

“We’ll definitely get there.”

19 Feb, 2019
Amazon bets on Tesla rival electric car with $982 million investment in Rivian
Financial Review

Detroit | Rivian Automotive founder RJ Scaringe approached deep-pocketed Saudi investors in late 2011 with an audacious proposal.

The young entrepreneur confessed he had no experience running a company.

He admitted his initial prototype - a battery-powered sports car much like Tesla's Roadster - was the wrong idea, and planned to build a pickup instead.

 

Rivian's common electric-battery platform could be used for other models in the future. 

Of course Scaringe didn't have a truck to show then.

What he did have was something in common with Mohammed Abdul Latif Jameel, the chairman of a Saudi auto distributor who, like Scaringe, also attended Massachusetts Institute of Technology.

Scaringe showed up recommended by MIT contacts, and playing the alumni card worked.

After a series of meetings pitching clean-running pickups and SUVs in hotels around Europe, he sealed a deal in early 2012 for $US5 million in funding to get Rivian Automotive in gear.

"It was a seminal point," Scaringe, 36, said in an interview. "They recognised the passion I had. A big part of it was building trust in me."

Rivian had another seminal moment Friday, when it announced a $US700 million ($982 million) funding round led by Amazon.com.

 

Rivian Automotive founder RJ Scaringe at the Los Angeles Auto Show with singer Rhianna.  USA TODAY

Scaringe also is in talks with General Motors on some kind of partnership with the largest US auto maker, as well, said people familiar with the matter.

Scaringe has spent the past seven years developing a pickup and sport utility vehicle that'll be built off a common electric-battery platform that could be used for other models in the future.

In exchange for leading the bulk of the $US1.15 billion in investment Rivian has drawn so far, Amazon will get a minority stake in the company.

The EV platform, which Scaringe prefers to refer to as a "skateboard", is a big part of his vision to deliver fat returns to those who've backed him.

In addition to selling his own trucks and SUVs, he's open to selling the technology to others for myriad applications, such as stationary batteries.

"There's another aspect to our business, which is leveraging our skateboard architecture and platform for non-Rivian products, which allows us to play in other spaces outside of our own brand and access other customers," Scaringe said.

In this sense, Scaringe is similar to Tesla chief executive officer Elon Musk, who's opened up the company's patents for use to help develop electric cars.

The two differ, though, in their willingness to let veterans of the auto industry help get their companies rolling.

 

The Rivian R1T. The EV platform, which Scaringe prefers to refer to as a "skateboard", is a big part of his vision to deliver fat returns to those who've backed him.  

Whereas Musk sought to reinvent carmaking with extensive use of automation - an ambition that contributed to repeated delays in getting the lower-priced Model 3 sedan to market - Scaringe has eagerly poached from big conventional car makers' manufacturing, engineering and design departments.

"He's taken time to learn from everyone's mistakes, and he's going after a market that is still growing," Tony Posawatz, an auto industry consultant who developed the Chevrolet Volt plug-in hybrid for GM, said of Scaringe.

Much of Rivian's workforce of about 750 employees is spread across California and Michigan, with automated driving and software engineers in San Jose, battery geeks in Irvine, and traditional auto engineers just outside Detroit. It also has a small office in the UK.

The company acquired its Normal, Illinois, assembly plant from Mitsubishi Motors in 2017 for $US16 million and was able to re-purpose some of the equipment the Japanese auto maker left behind.

 

The Rivian R1T. "You'll see us pulling people out of Land Rovers, BMWs, Subarus and Teslas," says Scaringe. Ben Moon

Rivian's vice president of manufacturing, Matt Tall, came from AM General, the maker of Humvees for the military and the Hummer SUVs GM once sold to civilians.

Jeff Hammoud, VP of design, is a veteran of Fiat Chrysler's Jeep.

In an interview before the Amazon announcement, Scaringe declined to comment on that deal, or on any discussions with GM.

He did say Rivian's backers, which include Japan's Sumitomo and Britain's Standard Chartered, are committed.

"We will bring on additional partners, but less because of capital reasons and more because of a need to have strategic relationships as we scale towards our broader vision," he said.

If Scaringe is able to land outside investment from several giants of the auto and technology sectors, he'll be making more Musk-like moves.

Tesla sold stakes to Daimler and Toyota and partnered with them on joint electric-vehicle projects to help weather the recession, though both have since parted ways.

China's Tencent Holdings ranks among the Model 3 maker's top shareholders.

Buy-in from Amazon and others will hand Scaringe the cash to help bring Rivian's R1T pickup to market on time next year.

The investment also carries with it the potential for the world's largest online retailer to eventually become a customer.

Amazon has been building out a fleet of vehicles bearing its brand to handle deliveries for its wildly popular Prime service.

A car buff since his youth, Scaringe grew up on Florida's Space Coast in Melbourne, near Cape Canaveral.

Like his father, he has a Ph.D. in mechanical engineering. He rebuilt a 1957 Porsche Speedster in his youth and dreamed of starting a car company.

While earning his master's and doctorate from MIT, where he was a member of the Sloan Automotive Laboratory's research team, Scaringe had an environmental awakening.

According to official company lore, he spent his free time hiking, carried around his own fork and spoon, dried his laundry on clotheslines strung around his apartment and biked to class, even in the winter.

In class, Scaringe was relatively quiet and well liked by his peers, said Wai Cheng, a professor of mechanical engineering who supervised him.

"He's an extremely nice guy, except when you play basketball with him," Cheng said of how other students described Scaringe.

"He's not an aggressive guy, but he's very competitive."

Scaringe went through several names for the company after founding it in 2009.

It was called Mainstream Motors on an interim basis and received seed capital from Florida-based Mainstream Engineering, a company his father owned.

It briefly went by Avera Motors until South Korea's Hyundai complained this sounded too much like its Azera sedan.

Scaringe settled on Rivian in 2011.

Back when its headquarters was near Cape Canaveral, Rivian got an early leg up from $US3.5 million in state funding.

That included financing from Florida's aerospace economic development organisation, which invested about $US1.5 million in return for stock warrants that it has yet to exercise.

"Obviously, we would have liked them to have built a giant car factory on the Space Coast, but ultimately we expect them to develop technology" that will prove useful to the space program, said Dale Ketcham, a spokesman for Space Florida.

At a briefing for journalists in November, Scaringe said Rivian was looking to do for autos what Patagonia has done for outdoor clothing, aiming for an upscale but utility-focused consumer.

His goal is to make a pickup and SUV that are premium and give buyers a spirit of adventure, but with clean emissions and great technology, including over-the-air updates.

If he delivers, Musk's success suggests Scaringe has a chance to be greeted with broad appeal.

"Tesla did an outstanding job," Scaringe said.

"They pulled customers out of luxury cars and even the Toyota Prius.

"You'll see us pulling people out of Land Rovers, BMWs, Subarus and Teslas."

- with Chester Dawson and Gabrielle Coppola

 

13 Feb, 2019
How a 27-year-old CEO built a $1 billion fashion startup
The Sydney Morning Herald

Zilingo's path to becoming a fashion platform with a valuation approaching $US1 billion ($1.4 billion) began in December 2014 when Ankiti Bose, then an analyst at Sequoia India, chatted with a neighbour at a house party in the Indian tech capital Bengaluru.

 

Bose, then 23, and Dhruv Kapoor, a 24-year-old software engineer at gaming studio Kiwi, quickly realised they had complementary skills and similar ambitions to build their own startup.

Four months later they had quit their jobs, and each had put in their $US30,000 in savings to found Zilingo, an online platform that helps merchants in south-east Asia to build up their businesses.

On Tuesday, the Singapore-based company said it raised $US226 million from investors including Sequoia Capital and Temasek Holdings Pte. The latest financing valued Zilingo at $US970 million, according to people familiar with the matter, who asked not to be named because the information is private. That makes 27-year-old Bose among the youngest female chief executives to lead a startup of this size in Asia.

Female founders remain rare in the global startup world. Of the 239 venture capital-backed startups around the world worth at least $US1 billion, only 23 have a female founder, according to data from Pitchbook in May last year.

"We were a bunch of twenty-somethings with nothing except this dream and we decided to chase it," Bose said.

Bose is now part of a group of founders in south-east Asia who are capitalising on the region's rapid adoption of smartphones and rising incomes. Online shopping in the region reached $US23 billion in 2018, according to a report by Google and Temasek. It's expected to exceed $US100 billion by 2025.

Zilingo posted revenue of $S1.8 million ($1.9 million) in the year ending March 31, 2017, up from about $S434,000 since its inception though March 2016, according to the company's most recent filing with Singapore regulators. Revenue grew 12 times in the year ending March 2018 and fourfold in the April to January period, according to the company. Kapoor holds the title of chief technology officer.

The company started off by helping small merchants sell to consumers, and has since expanded into new areas. As the founders dealt with thousands of small sellers, they realised that many lacked access to technology, capital and economies of scale.

So they expanded, developing software and other tools to allow vendors to access factories from Bangladesh to Vietnam and also help with cross-border shipping and inventory management. Since 2018, Zilingo has also worked with financial technology firms to provide working capital to small sellers so they can buy raw materials to produce goods.

Listings are provided for free, with the company charging a commission of between 10 per cent and 20 per cent on orders.

Some of Bose's early inspiration came from a visit to Bangkok's popular Chatuchak market, which features more than 15,000 booths selling goods from across Thailand. She realised the sellers didn't have sufficient opportunities to expand.

Since setting up its first presence in Thailand and Cambodia in 2015, the company has grown to have offices in eight countries with 400 employees. It operates fashion e-commerce sites in Indonesia, Thailand and the Philippines and is preparing to launch in Australia soon.

While Bose has figured out a way to differentiate Zilingo, her challenge is to now manage the company's "hyper-growth" by recruiting the right leadership team and maintaining the right culture, said Shailendra Singh, managing director of Sequoia Capital (India) Singapore.

Raised in India, Bose was exposed to different cultures and languages as a child because her father's job as an engineer at a state-owned oil company caused the family to constantly move.

Her mother gave up her career as a university lecturer and devoted her time to teaching her only child at home. Bose excelled as a student, studied maths and economics, and eventually landed a coveted job with consultancy McKinsey & Co in India, where she covered India's burgeoning technology, media and telecom sector.

She took the calculated plunge to set up Zilingo, she says, after gaining expertise evaluating major startups in south-east Asia at Sequoia India's venture capital business. As she did that, she saw a huge opportunity to build a business herself.

"I kept raising my hand and said, 'Teach me everything,' " Bose said of her pre-startup years.

"I busted my ass, working 18 hours a day because it was so much fun."

13 Feb, 2019
Prices on the rebound at Amazon’s Whole Foods
Image via Google

Whole Foods is raising prices again, bowing to pressure from some consumer product makers to cover rising packaging, ingredient and transportation costs on hundreds of products.

Internal communications reviewed by The Wall Street Journal show the natural grocer raised prices from US10c to several dollars as suppliers boosted their prices in the face of growing costs. Retailers across the spectrum are starting to pass on similar price increases in response to the growing signs of inflation. Amazon.com cut prices after acquiring Whole Foods in 2017 to try to counter the grocer’s high-cost reputation. But even the e-commerce giant has limits as to price increases pushed by suppliers.

Whole Foods increased prices this month on dozens of items, from Dr Bronner’s soaps to Haagen-Dazs ice cream, according to an email viewed by the Journal. A separate company email in December listed 550 additional price increases on products including crackers, olives and biscuits.

Whole Foods said in the December email that suppliers were charging more for those products due to inflation. The separate price increases this month followed the expiration of annual contracts to sell about 700 goods at low prices, Whole Foods said. Those contracts won’t be renewed, the chain said, and the increases add up to hundreds of thousands of dollars a week in additional revenue.

Several consumer goods companies, including Procter & Gamble and Clorox, have recently raised prices or pledged to do so, to offset the higher costs of raw materials and boost profits. Nearly half of 52 consumer goods manufacturers surveyed recently by consulting firm Acosta raised prices last year.

Mondelez International and Hershey last month said they would raise prices this year. Price increases have now started to spill into natural brands, some of which source expensive ingredients with limited supplies.

The average price increase at Whole Foods was US66c, according to the list.

Supermarkets have resisted passing along the price increases amid intensifying competition in their industry. Some are starting to relent. California-based Smart & Final Stores, a warehouse-style grocer, has received requests from hundreds of suppliers to raise prices and expects costs to continue to rise this year.

Some supermarkets are also agreeing to stock new brands and sizes that bring food makers more profits. Others, such as Kroger, are stocking more store-brands to try to help keep prices low overall.

At Whole Foods, a basket of 40 select items purchased from their stores cost $US191 last month, according to the Telsey Advisory Group, up more than 3 per cent from what the same basket of goods cost late last year.

A Whole Foods spokeswoman said some of the grocer’s suppliers had raised prices due to higher material, labour and freight costs. Whole Foods had passed on some of those increased costs and absorbed the rest, she said.

1 Feb, 2019
Amazon first-quarter sales forecast misses estimates
The Financial Review

Seattle | Amazon forecast first-quarter sales below Wall Street estimates, even as sales for the holiday quarter hit a record and rose 20 per cent.

Shares of the company fell 1.7 per cent to $US1690 after the bell.

Amazon began removing a wide array of products from its India website late on Thursday to comply with the new foreign investment curbs that kick in on February 1. These rules disallow companies from selling products via vendors in which they have an equity interest.

 

Net sales for the fourth quarter rose 19.7 per cent to $US72.38 billion, beating the analyst average estimate of $US71.87 billion. AP

Amazon chief financial officer Brian Olsavsky said on a call with reporters that the situation in India is "a bit fluid right now" but remains a good long-term opportunity.

For years, investors have given Amazon a green light to sink money into new endeavours: warehouses and data centres around the world, a studio near Hollywood, research on artificial intelligence. Through these bets, Amazon has lured people to shop online and enterprises to ditch their hardware for the cloud.

Though the company is still marching ahead, challenges have arisen, particularly in markets outside the United states.

The company forecast net sales of between $US56 billion and $US60 billion for the first quarter, missing the analyst average estimate of $US60.77 billion, according to IBES data from Refinitiv.

Analysts have also noted that sales growth slowed down in some European markets during the crucial holiday quarter.

Overall, net sales for the fourth quarter rose 19.7 per cent to $US72.38 billion and beat the analyst average estimate of $US71.87 billion on the back of a strong holiday season, which includes the major US shopping event Black Friday.

Net sales in North America, its biggest market, jumped 18.3 per cent to $US44.12 billion in the reported quarter. International revenue came in a touch above expectations, too.

Amazon said tens of millions of shoppers signed up for Prime during the season, helping boost revenue from subscription fees 25 per cent to $US4.0 billion. The company has more than 100 million Prime members globally.

This expansive customer base has lured merchants to sell goods on the company's marketplace, to the point where more than half of goods sold on Amazon came from third parties earlier last year.

Amazon takes a lucrative cut of these sales, which grows when merchants pay the company to handle their shipping, as many do.

Making Amazon more profitable still are ad sales. The company now ranks alongside Alphabet's Google and Facebook as titans in marketing, letting these same merchants pay for high placement in Amazon's search results.

Ad sales and "other" revenue jumped 95 per cent to $US3.4 billion in the fourth quarter.

Amazon's net income rose to $US3.03 billion, or $US6.04 per share, in the quarter ended December 31 from $US1.86 billion, or $US3.75 per share, a year earlier, which included a tax gain

 

31 Jan, 2019
Gen Z shoppers still prefer websites to apps, study finds
Inside FMCG

Gen Z consumers prefer to buy from businesses that offer both online and in-store experiences, according to a WP Engine study.

Gen Z shoppers, born between 1996-2010, said they prefer businesses to have an online presence and a physical storefront and about 62 per cent have said an online-only company is not less trustworthy than a solely brick-and-mortar business.

The study, which explores three key aspects of Gen Z’s relationship with digital: Being Online, Buying Online and Building Online, also indicates that about 63 per cent of Gen Z consumers are more likely to buy from a company that contributes to social causes while, conversely, 54 per cent of Baby Boomers said it didn’t matter.

“Gen Z is well on its way to becoming the largest generation of consumers by the year 2020,” said Mark Randall, Australia/New Zealand country manager at WP Engine.

“This will have profound implications for marketers and brands who, to effectively engage Gen Z, must embrace new technologies, experiment with new forms of communication, and internalize the nuances in how Gen Z seamlessly blends the analog and digital worlds.”

The study shows that more than half, 55 per cent, of Gen Z consumers are dependent on the internet and can’t comfortably go more than four hours without it.

But, despite Gen Z’s eagerness to access the web using new methods and different devices, they still show a clear preference for a company’s website over a mobile app when making purchases, the survey shows. This held true across all generations, with Baby Boomers leading at 89 per cent, followed by Gen X (87 per cent), Millennials (80 per cent), and Gen Z (75 per cent).

About 70 per cent of Gen Z consumers worry that their online actions, including social media posts and past purchases, will affect job offers and 49 per cent believe their online reputation will determine their dating options. WP Engine said perhaps that’s why Gen Z is fiercely committed to authenticity when considering the brands they use and buy.

According to the study, 75 per cent of Gen Z shoppers trust a company more if the images they use are not photoshopped and 85 per cent trust a company more if they use actual customers in their ads.

“Gen Zers are empowered, connected, practical, empathetic self-starters who want to stand out and make a difference in the world,” said Jason Dorsey, president at The Center for Generational Kinetics.

“They merge the human and digital experiences – it is all one combined reality for them. They are fuelled by technologyengagement and value uniqueness, authenticity, creativity, shareability and purpose. And they look for that from the world around them.”

The Center for Generational Kinetics was commissioned by WP Engine to conduct the study.

31 Jan, 2019
'Sick of being milked for money': How Napoleon lost his beauty empire
The Sydney Morning Herald

"Down but not defeated" was how Napoleon Perdis described his frame of mind on Thursday afternoon, blaming "greedy landlords", an "uncompromising credit environment" and a shift to online retailing for the shock collapse of his $120 million beauty empire.

Since he was a 12-year-old boy Perdis has devoted his life to creating wondrous products and potions to make women more beautiful, but on a hot Thursday afternoon at his Alexandria warehouse the make-up king was feeling anything but glamorous.

"I am absolutely exhausted," the flamboyant and outspoken businessman told PS exclusively as news that his eponymous cosmetics empire had been placed into voluntary administration began to reverberate, casting a cloud over hundreds of jobs and stores across the country.

Famed for his theatrical fashions and designer handbags as much as he is for his hard-nosed business acumen, Perdis, who is based in Athens with his wife and business partner Soula Marie and their four daughters, flew into Sydney on Wednesday ahead of Thursday's announcement.

He is no longer involved in the day-to-day running of the business which bears his name, but is advising administrators Worrells Solvency and Forensic Accountants as they seek to find a buyer.

While he agreed the news was not good, he remained defiant that the business he had poured his life into remained a healthy, ongoing concern, but conceded it may be a future without him at the helm.

He blamed poor retail conditions and an emerging "corporate feudalism" that favours large global corporations for his company's current predicament.

"And I am absolutely sick and tired of having bankers, consultants, leasing advisers and landlords milking me for money ... to be honest I am feeling a little bit liberated too," Perdis said.

Perdis added he had been trying to find a buyer or investor in his business for the past 18 months and said there were several interested parties, but that the empire he built into a national and international brand had to be "right sized".

"That means cost-cutting ... yes, it is going to be painful, but that's the only way for it to survive," he said.

"This is a lap band for the business ... and in a big way.

"I blame a lot of factors, from greedy landlords who will not allow us out of leases and who then charge us 'de-fit' costs on the stores ... that's cost me $3.5 million alone. The malls are dead, there's no foot traffic, everyone's buying cosmetics online but the landlords don't want to hear about it.

"The bank wanted me to hire a consultant, which we did. That cost me another $600,000 and it's done f--- all. The retailers want to bring in global brands into their stores, but that means a local Australian brand like mine cannot compete.

"Just over half our stand-alone stores ... around 25 ... will have to close, that's over a hundred jobs."

Perdis said he hoped a buyer would be found, or an investor, and that he would be keen to stay with the business as a creative director or consultant.

He estimated the company's "enterprise value" at between $35 million and $45 million, but admitted the business had suffered significant blows in recent times, including his acrimonious departure from Myer over Christmas, which knocked a $13 million hole in the brand's revenue.

Last year he launched his brand into the huge Priceline discount pharmacy chain, and said the retailer has remained one of his most ardent supporters.

"The last 18 months have been very tough trading conditions, when we moved into the USA it rendered our business in Australia anaemic ... all the money was going to America," he said.

In 2015, Perdis pulled out of America to refocus his business on the Australian market, which at the time he said had a $120 million annual turnover.

"I never intended to end up in this position," he said. "But I remain incredibly proud of what we achieved."

30 Jan, 2019
Temple & Webster defies housing downturn as online sales rise 40pc
Financial Review

Online furniture retailer Temple & Webster is defying the downturn in the housing market, posting its first interim profit after growing sales 40 per cent.

Temple & Webster booked earnings before interest tax depreciation and amortisation of $900,000 for the six months ending December - beating market forecasts around $600,000 - compared with a loss of $500,000 in the year-ago period and a $5.4 million loss two years ago.

Revenues rose 40 per cent to $49.3 million, underpinned by a 32 per cent increase in active customers to 231,000, 35 per cent growth in its B2B or trade and commercial division and a small increase in revenue per active customer.

 

Temple & Webster CEO Mark Coulter says the online retailer's maiden interim profit and strong sales growth is encouraging given the housing market downturn. Daniel Munoz

Gross margins rose to 44.6 per cent from 44.2 per cent, boosted by better terms from suppliers and stronger sales of private label products, while operating costs as a percentage of sales fell 6 per cent, helped by more efficient marketing spend and well-controlled fixed costs.

As a result, the contribution margin improved to 16.5 per cent from 16.1 per cent, within the target range of 15 to 17 per cent.

The results were unaudited. Audited results including net profit will be released in late February, with analysts forecasting a net profit of $500,000.

Temple & Webster chief executive Mark Coulter said the result was encouraging, given the housing market downturn, and is confident of delivering the company's first full year profit this year.

"Interestingly, the continued strong performance of our furniture categories during the half suggests consumers are still willing to spend money on their homes, and that our positioning around affordable beauty is resonating well with our customers," he said.

"Our strategy of being a category specialist, with a clear customer offering built around the largest range of furniture and homewares in the country, combined with the most inspirational content and the best customer service is working," he said.

January trading had started strongly, with sales up more than 40 per cent.

Temple & Webster finished the half-year with cash of $11.5 million and no debt and is confident of delivering a full-year profit.

The Australian furniture and homewares market is worth about $13.6 billion, but online penetration is estimated to be only about 4 per cent, according to Euromonitor, compared with 13.7 per cent in the United States and 14.2 per cent in Britain (in 2017).

Temple & Webster believes online penetration will rise as online-savvy millennials start buying furniture and homewares and as new market players such as Amazon accelerate the shift from bricks and mortar stores to e-commerce.

The company is expanding its range in all key categories and adding new categories such as DIY products (flooring, window coverings, sinks, taps) and small appliances.

It is also expanding its private label offering to improve margins and further differentiate its range. Last year, for example, it launched a premium paint range, Colour by Temple & Webster, in partnership with Taubmans owner PPG Industries.

The online retailer is building its B2B business and is considering expanding into New Zealand, launching a pilot program.

Temple & Webster shares have more than doubled over the last 12 months, reaching $1.32 in November and exceeding the December 2015 issue price of $1.10.

17 Jan, 2019
Kogan sales numbers show iPhone tipping point
Financial Review

Australians have joined the Chinese in falling out of love with the Apple iPhone judging from the latest sales data released by online retailer Kogan.com.

Kogan told the ASX on Thursday that subdued demand for new Apple products, in particular the new iPhone, contributed to the 46.7 per cent decline in its revenue from global brands in the six months to December.

The company published a chart showing its revenue from Apple products had more than halved in the six months to December compared to the same period in 2017.

 

Ruslan Kogan's Kogan.com had record sales over Christmas but iPhone sales were down significantly. David Rowe

Apple's sales globally have been hit by lengthening iPhone replacement cycles in China and elsewhere. On January 3, the company issued its first negative pre-earnings release in 15 years largely because of weaker sales of iPhones in China.

The negativity towards Apple was brought home to Chanticleer this week when a chief executive of a local company with annual revenue of $3.5 billion said he was "sick" of Apple and was going to return to devices running on Google's Android platform.

He was frustrated that an upgrade of software for his Apple watch had slowed the responsiveness of the device, possibly as a way to encourage him to buy a new Apple watch. But he admits that extracting himself from the Apple ecosystem will be difficult and time consuming.

This ecosystem has been one of the factors which has worked in Apple's favour over the past decade. Apple users have tended to buy multiple products and services including music services, streaming video, cloud storage for excess data, iPads, iPods, iPhones, HomePods and Apple Macs.

Apple is confronting a number of headwinds including consumer resistance to the iPhone upgrade costs, which are now in excess of $1000, lack of urgency to upgrade because of the quality of previously issued products and the improved quality of rival products.

Savvy consumers know you can buy phones with all of the features of an iPhone for half the price.

Kogan shares rose 22 per cent to close at $3.97 a share on the back of higher revenue from other segments of the Kogan business, including a 23.6 per cent rise in revenue from exclusive brands and a 92.8 per cent rise in revenue from partner brands.

The positive sentiment towards the stock was helped by the company's statement that gross margin for the first half of 2019 was broadly in line with the first half of 2018.

Kogan shares have fallen more than 60 per cent since hitting a record high in June last year. The company is forecast to have revenue growth this year of about 11 per cent, a growth rate that does not warrant the extreme price earnings multiples applied before the stock collapsed.

5 Jan, 2019
Uniqlo ups raid on Australian retailers
The Sydney Morning Herald

The chain grew revenue at its 16 Australian stores by 14.5 per cent, or $31 million, to $243 million in the year to the end of August, according to documents filed with the corporate regulator in late December.

Uniqlo's sales rose by 14.5 per cent last year. 

 

Uniqlo, describe by some as a "department store killer", reported at a before-tax profit of $9.7 million, up from $7.5 million last year, the documents show.

Uniqlo is ubiquitous in its native Japan and has found success across the globe with its range of affordable basic fashion items, like cashmere jumpers, button-down shirts and lightweight down jackets.

The chain opened its first Australian store in Melbourne in April 2014, and has expanded rapidly to now have 16 stores across all all mainland states.

It opened two stores in 2018, with two more stores set to open in 2019 - one in Westfield Hornsby in Sydney, and one in Docklands, Melbourne.

The most recent Australian Bureau of Statistics data shows that Australian apparel sales are growing at only around 4.8 per cent year-on-year, suggesting Uniqlo's growth came at the expense of incumbent retailers.

Pippa Kulmar, from the consultancy Retail Oasis, said Uniqlo had fared better than other fast-fashion players like H&M and Zara by sticking to quality, timeless, basics rather than catwalk-inspired pieces that went out-of-vogue with the turn of every season.

“They’ve been a slow burn in the Australian market because a when they arrived here a lot of people didn’t know who they were unless you’ve been exposed to them in Asia,” she said.

“Where Uniqlo has been very successful is there’s been a larger movement in fashion towards trans-seasonal clothes - buying a pair of jeans that will last one or two years, not something that's good for one season and then you throw out after it’s not fashionable:”

Ms Kulmar said Uniqlo would be taking sales from everyone from outdoors retailers, with its down “puffer” jackets, through to middle-market fashion retailers and department stores that could not compete with its prices.

“You can’t grow that much without stealing a lot of share from a whole lot of different retailers”, she said.

Uniqlo is just one of the international fast-fashion retailers who have colonised, alongside Zara, H&M and Topshop, which together have caused major headaches for local rag traders.

Myer's sales fell 3 per cent to $3.1 billion last financial year, David Jones' fell 0.1 per cent, Just Jeans' fell 1.7 per cent, and the Country Road group fell 1.8 per cent.

Uniqlo's Australian armed is owned via a Singaporean subsiduary. It paid income tax of $3.2 million in Australia last year, its corporate documents show.

31 Dec, 2018
10 Social Media Trends to Watch in 2019
Entrepreneur

As social media platforms have evolved into full-blown communication channels, more brands are relying on these platforms to reach their target audiences.

Consumer attention is scattered across various social platforms, not to mention apps and other online diversions. Brands that hope to capture consumers’ attention and dollars need to keep in touch with how their audiences utilize these platforms. The bottom line is that, as trends evolve on social media, so must the corresponding marketing.

With the start of a new year, it’s time to look into the crystal ball of emerging trends on social media. What is going to influence social media users? What does this mean for brand marketing? And what do we need to be aware of to stay current and relevant in 2019?

Here are the top 10 social media trends to keep an eye on in the new year.

1. Rebuilding trust in social media platforms.

Social media platforms continue to grow annually -- in fact, Facebook has more than 2 billion active users each month. However, the picture isn’t entirely rosy. Consumer confidence in social media is on shaky ground.

Users are growing increasingly leery of the information they find on social media. And marketers may be contributing to the situation when they fail to properly label paid advertising posts or they bombard a platform with targeted ads that overwhelm users. All of this can leave users feeling distrustful of both the brand and the platform.

Younger generations have little tolerance for marketing that comes off as disingenuous. Brands will need to look for ways to build consumer trust. That means focusing on ways to authentically connect with audiences, and ways to highlight their humanity. Brands need to connect with their audiences on a meaningful level. No one likes being constantly swamped with ads. Even worse is when you’re being marketed to and don’t even realize it.

2. Social media is about storytelling.

Social media’s popularity is rooted in the fact that it allows us to share our life experiences with friends and families. We get to tell our stories through our posts, and we get to see a snapshot of everyone else’s lives through our news feeds. At first, that was through written posts and photos, but video content is increasingly popular.

Social media is adapting, embracing new ways to allow people to tell their stories and share their narrative with the world. Instagram, Snapchat and Facebook are embracing this trend, and it’s changing the way we consume social media content.

This opens the door for brands to share more human stories of their own, which will inspire audiences to try out their product. Storytelling feels real, immediate and personal, but it also demands a mix of more time-intensive video, images and graphics, and requires brands to be more creative and thoughtful in the intent.

3. Build a brand narrative.

Along with honing their human stories, businesses are going to need to build a strategic narrative behind their brand. Narratives capture moments and experiences shared between a user and a product; they’re the conversations that are occurring, and they’re often about trying to create a broader, more positive change.

These narratives can be distributed through social media and digital media, and they reflect what a brand’s community is saying about them. If a brand can build a larger story, it will have a better chance of success.

Brand narratives need to be compelling and lead audiences to an action. Evaluate your brand story, and ensure it is inspiring and stands out against the messiness of other social media content.

4. Quality and creativity over quantity.

Marketers often have a knee-jerk reaction to trends by flooding platforms with mediocre and uninspired content in hopes of riding the trend wave. Would-be customers react by tuning out and quickly dismissing subpar messaging. The threshold for gaining customer attention and trust has grown exponentially. Marketers who hope to gain consumer consideration must be willing to go the extra mile in creating engaging content.

The bottom line is, to have an impact, brands must be purposeful and creative. Less content, if it’s created thoughtfully and is well-positioned, will have greater impact than an abundance of content that is uninspired, heavy-handed or seen as shallow or dull.

Related:5 Ways to Create Engaging Content Your Audience Will Share

5. Put a human face to your brand.

Personal branding is a must on social media. Putting a real, human face to a brand is key in building trust and loyalty, especially for small, relatively unknown businesses. Personal branding gives a business a human element that will naturally connect customers and make the brand seem more relatable. Businesses that learn to foster their human element will have a real advantage over those who hide behind a logo.

One popular trend in humanizing a business is to promote the personal brand of the business owner or a high-level leader. This can be done through guest blogging, podcasts and webinars. Giving the public an up-close view of the company’s leader can strengthen its brand reputation.

Related: 7 Rules for Building a Distinctive Personal Brand (and a Bonus to Get You Started)

6. Influencers continue to grow their communities.

Influencer marketing continues to develop and grow on social media platforms. Influencers are social media figures who have gathered a defined community around themselves. Their large followings (which can range from the thousands to over a million viewers) give them influence over others. They can be incredibly effective as salespeople because we inherently trust the people we follow on social media.

Much like personal branding, when done well influencer marketing gives a human voice to brands. Influencer marketing is less direct than traditional forms of advertising, but it can effectively create authentic ways of connecting with customers.

Related: 10 Influencer Marketing Trends to Keep Your Eye On

7. Selfie videos and branding.

The selfie culture continues to flourish on social media, with the popularity of selfie photo evolving into the self-recorded video. These “selfie videos” are drawing high user interest on social media. Like the selfie photo, the selfie video allows users to capture a moment in time, but the video format allows users to communicate in a deeper and more personal way than a photo ever could. Selfie videos tend to be short and feel more immediate than a written post with a photo.

Businesses need to take note: viewers spend hours watching friends’ videos on Snapchat, Instagram and Facebook. Brands would be wise to look for ways to incorporate first-person “selfie video” content as part of their marketing strategy.

Traditional advertising can be off-putting to younger audiences, who are more cautious about their purchases and want a more authentic experience with their brands. The selfie video can help a brand seem more relatable and trustworthy.

8. Segment your social audiences.

While brands talk about their customers and audiences, the reality is that most businesses will have multiple audiences. Segmentation is the process of organizing your audience into manageable groups (or segments) so you can tailor your messaging and communications to the preferences of each group. Social media is most effective when you segment your audiences so you can be relevant to the right groups of people at the right time.

Making assumptions about your audience and lumping them all together could limit your ability to reach more people. So the more you know about your audience and the various groups that make up your audience, the better you can adjust your messaging and narratives to fit each segment.

9. Hyper-targeted personalization.

Customers have come to expect brands to tailor special offers and discounts to their wants and needs. To keep up with expectations, businesses need to step up their game when it comes to targeted advertising. Nearly every social media platform offers some level of audience filtering when you opt to pay for advertising. These options range from simple geographic targeting to advanced filters that refine audiences into highly specific segments.

In the coming year, brands will increasingly turn to hyper-targeted personalization to reach their audiences. This is often achieved through retargeting or remarketing ads. Ever wonder why you’re seeing an ad on your social media site for something you were shopping for earlier? That’s hyper-targeted personalization at work.

Using “cookies” while you browse online, marketers collect data on users, such as online habits, the area they live in and any other pertinent information. But marketers will need to find a balance between being too pushy and being able to offer personalized advertising that will genuinely interest customers.

10. Know your platforms.

Businesses should carefully consider which social media platforms to focus on, as each platform tends to be used by different groups. For example, over 80 percent of Pinterest users are female, and more than 50 percent of users are from the US. So, if a brand is targeting American women, posting on Pinterest could help isolate that group.

Meanwhile, Snapchat users tend to be younger than those who use Facebook. And career-focused professionals spend more of their time on LinkedIn. Brands that use multiple platforms should use these distinguishing characteristics to decide where to post content and on which platforms to focus the majority of their marketing efforts.

27 Dec, 2018
Amazon enjoys a record-breaking Christmas for sales
The Financial Review

 

At the bottom of it all was an announcement from retail giant Amazon; they had broken their own record for number of items ordered worldwide.

The company only specified that they had a "record-breaking holiday season," and that customers had purchased millions more Amazon devices compared with last year.

 

Amazon only specified that they had a "record-breaking holiday season," and that customers had purchased millions more Amazon devices compared with last year.  Robert Bumsted

But it was enough to send the S&P 500's retail index rising by 7.4 per cent and Amazon's own shares soaring by 9.5 per cent.

Here are the best sellers that drove the last rally of 2018;

  • Amazon Echo Dot; voice-controlled speaker, enhanced by Amazon's virtual assistant Alexa
  • Ring Protect and Blink Home Security: affordable, camera-based home security systems
  • L.O.L. Surprise!Glam Glitter Series Doll with 7 surprises: customisable dolls with a mystery factor and a social media following
  • Bose QuietComfort 35(Series II) Wireless Headphones: noise-cancelling, wireless headphones linked to Amazon Alexa and Google Assistant via voice control
  • Samsung Flat 65" 4K UHD 8 Series Smart LED TV: 4x the resolution of full HD, optimised for gaming, and outfitted with voice assistance
21 Dec, 2018
'Christmas for us is effectively over': Boxing Day sales come early

While Boxing Day is not until next Wednesday this year, some retailers are kicking off their post Christmas sale before Christmas even happens.

Kate Morris, the founder of Adore Beauty, is starting the Boxing Day sale at the online beauty retailer on Friday.

"It's the way it works in ecommerce, you get your pre-Christmas run in and then you get the cut off for what you can and can't get people before Christmas," she says.

"We always try to err on the side of being a bit conservative and once we are no longer confident gifts will get there by Christmas we start our sale. Once you are past the pre-Christmas delivery cut off Christmas for us is effectively over."

Boxing Day still busy

Morris says she expects trade at the retailer, which turns over more than $25 million a year, to be strong during the sale and nominates Christmas gift sets and GHD hairstylers as the most popular likely items.

"People do spend more money at this time of year anyway, including on themselves and we usually have some pretty good offers," she says. "If you are not confident that Santa is going to bring you what you want, take matters into your own hands."

Morris says even though the sale will be starting before Christmas she expects Boxing Day itself to still be busy for online trade.

"Some people love running through the doors on Boxing Day morning but I'd rather poke pins in my eyes."

 

Liz Lefort, head of consumer marketing at PayPal, says Australia’s changing Boxing Day shopping habits reflect a shift towards online and mobile shopping.

“Australians are looking for the best deals, not the stress that’s traditionally associated with heading out to the shops for the Boxing Day sales, so it’s not surprising to see Boxing Day sales appear before Boxing Day," she says.

The sales aren't just limited to online with major retail chains including West Elm, Cotton On and Country Road already starting sales. However, the big retailers such as department stores Myer and David Jones and tech giants Apple and Samsung are holding out until Boxing Day.

Holding firm

Despite the early sales start for some retailers, the Australian Retailers Association is still expecting the Boxing Day sales and the post-Christmas period to be strong.

The ARA and Roy Morgan predict consumers will spend $18.3 billion nationwide from December 26, 2018 to January 15, 2019.

ARA head Russell Zimmerman says only a minority of retailers are "jumping the gun".

"Boxing Day is still a very important point in the retail calendar and I suppose some try and get the competitive advantage by going earlier but the majority try and keep their margin as long as they can," he says.

Retailers holding firm until Boxing Day, include Erica Stewart, of online retailer Hard To Find, who won't start her sale until then.

"There is a chance that there is a bit of retail fatigue and we felt that going out immediately after everyone has done their Christmas shopping with a sale was too much for our customers," she says.

14 Dec, 2018
Sigma bidders confident of ACCC tick for $726m takeover
SOURCE:
The Age

Darrian Trainer

 

The backers of the bid for pharmaceutical giant Sigma Healthcare are confident the competition regulator won't knock back their takeover offer for the second time.

Sigma shares soared 45 per cent on Friday after Australian Pharmaceutical Industries (API) snatched up a 13 per cent stake in its rival and unveiled a $726 million indicative takeover bid.

API said it had tabled a non-binding indicative proposal to Sigma's board in October, which offers Sigma investors 0.31 API shares and 23¢ cash for each Sigma share they own. The proposal is subject to due diligence and approval by the Australian Competition and Consumer Commission (ACCC).

The suitor faced questions about whether the competition regulator would allow the merger of what will be the second and third largest players in the industry 16 years after it knocked back their last attempt at a deal.

API said the value of the proposal equates to 68.6¢ a Sigma share, which represents a 69 per cent premium to the target's closing share price on Thursday of 40.5¢. Sigma shares rocketed 48 per cent to 60¢ on Friday.

12 Dec, 2018
AuMake expanding online in China through JD partnership
Inside FMCG

AuMake International Limited has joined forces with JD Worldwide, a division of Chinese e-commerce giant JD.com, to create a new omnichannel platform for Australian and New Zealand brands to reach Chinese customers.

The strategic agreement, which was signed in Sydney on Tuesday, will see JD combine its online and logistics capability in China with AuMake’s retail store and brand building capabilities in Australia.

The partnership mirrors a similar agreement between Alibaba’s Tmall and Chemist Warehouse, the companies noted in a statement.

The agreement builds on the booming daigou industry in Australia and New Zealand, where personal shoppers, often Chinese students or tourists, buy and ship products on behalf of family, friends and other clients in China.

AuMake over the past two years has expanded its chain of retail stores catering to daigou shoppers with relevant products and services.

Under the agreement, AuMake will become JD’s exclusive retail store partner in Australia and New Zealand and connect existing and future store customers to its online flagship on JD’s cross-border platform, JD Worldwide.

JD, under the agreement, will fully support AuMake’s online flagship, with an initial sales target of 10 million RMB ($2 million) per month, and provide access to its warehouse and dispatch logistics network in China.

The companies will also work together to incubate and develop new brands to be exclusively sold on the JD Worldwide platform and in AuMake retail stores.

AuMake executive chairman Keong Chan (pictured above, right) called the agreement a “company-changing event”.

“This is a company changing event for AuMake and confirms the value that we have created so far via our retail store distribution network in Sydney,” he said.

“Under this collaboration with JD Worldwide, AuMake will now be able to reach hundreds of millions of customers in China with new brands and products, including brands and products owned by AuMake.”

Keong added that he believes AuMake and JD together can fundamentally change the way in which Australian and New Zealand products reach the Chinese market.

6 Dec, 2018
3 Suprising Facts From Cyber Weekend
SOURCE:
Ragtrader

Rag TraderAustralian consumer awareness of Cyber Weekend has increased dramatically in the past three years with expectations now that deals will be on offer, as reported by Salesforce.

 

1. Shoppers turned to their mobile devices more than ever this Cyber Week.

 

66% of all traffic and 54% of all orders came from a mobile device with peak days seeing 72% and 58% respectively.

 

Salesforce ecommerce expert James Johnson said that consumers are more likely to complete purchases during the sale period.

 

“Consumers are in control and choose how they wish to interact and transact with brands and retailers.

 

“They are increasingly using mobile to do so.

 

“They are also more likely to complete purchases, with global data showing a significant jump in conversion rates.”

 

2. Black Friday won the revenue race

 

Australian retailers experienced a 15% year-over-year growth in digital revenue with the Saturday after Black Friday seeing the greatest year-over-year gains.

 

The biggest digital revenue producing day was Black Friday, followed by Cyber Monday.

 

“Retailers are responding to this awareness and expectation, with the opportunity cost of not participating increasing,” Johnson said.

 

“There is a race to release deals earlier to beat competitors.”

 

3. The average discount was 31%

 

During the sale period, retailers offered an average discount rate of 31%, up slightly from 30% in 2017.

 

Cyber Sunday was the best digital discount with the average retailer offering a 34% discount, followed by Cyber Monday at 33%.

 

“There is a growing importance in brands and retailers running connected campaigns and experiences, combining the right message, to the right customer, at the right time,” Johnson said.

 

3 Dec, 2018
China lifts e-commerce import limits
The Australian

Australian companies such as Treasury Wine Estates, Blackmores and A2 Milk could benefit from new moves in China to boost the e-commerce market announced last week.

China’s Ministry of Finance announced last week that it will lift the annual duty free limit for individuals buying goods overseas by 30 per cent to 26,000 yuan, around $5078.

It is also adding to the list of products which can be imported into China duty free on cross border e-commerce platforms — goods including sparkling wine, beer made from malt, fitness equipment and condoms.

The higher caps, which will come into effect from January, along with other major changes to e-commerce regulations, are set to further boost the potential for sales into China of high-quality foreign consumer goods.

Figures from China’s Ministry of Commerce show retail imports into China on e-commerce platforms rose by 54 per cent to a record 67.2 billion yuan ($13.1bn) for the first 10 months of this year.

The ministry said it would be more than doubling the cap on individual duty free transactions from 2000 to 5000 yuan and signalled it could increase the total annual cap in future in line with rising incomes.

The higher import ceiling will be good for the daigou market in Australia, where personal shoppers sell a range of consumer products to their friends and family in China, and for Australian companies selling their products directly into China on e-commerce platforms such as Alibaba’s TMall Global.

But it comes at a time when the Chinese government is also tightening e-commerce regulations from next year with stricter requirements on labelling, formalisation of import channels, reporting requirements and moves to increase liability on exporters and e-commerce channels to prevent fraud and fake products.

Australian companies selling through e-commerce channels in China have been closely watching the impact of the new regulations and clarifications being announced in recent weeks as the Chinese government seeks to have more regulatory control over the rapidly growing e-commerce import sector.

A2 Milk chief executive Jayne Hrdlicka said the company welcomed the latest round of guidance on how the new e-commerce laws will work when they come into effect next year.

Foreign companies have been given a grace period until the end of March to comply with the changes.

Ms Hrdlicka said the latest round of statements issued last week provided further clarity on issues such as defining the major participants within the cross border e-commerce channel and their responsibilities.

She said English label products which complied with their country of origin regulations would still be able to be sold through cross-border e-commerce channels provided that the Chinese consumers had access to an electronic Chinese translation of the packaging label.

Other requirements include the need for adequate product traceability systems, return and exchange systems, product recall systems and consumer dispute handling processes.

They also include real time reporting of transaction, payment and to Chinese customs.

The higher duty free cap announcement made last week follows comments by China’s President Xi Jinping at the Shanghai Import Expo last month that China would be taking measures to boost its e-commerce business including cross-border e-commerce sales.

China sees the moves as opening the local market for more high quality foreign products and encouraging Chinese companies to upgrade their production by exposing them to competition.

A spokeswoman for Treasury Wine Estates, one of the largest foreign suppliers of wine to the China market, said the company did not want to comment on the latest Ministry of Finance announcements.

While the higher caps will help boost the total e-commerce market in China for foreign goods, the tighter regulations being introduced will put pressure on Australian companies to comply.

Concerns about the extent of the new changes saw the Chinese government announce last month that it would delay the implementation of some parts of the new laws by three months to give exporters more time to comply.

Export-oriented shares on the Australian stockmarket surged yesterday.

A2 Milk jumped 5.3 per cent to $10.3, Blackmores rose 3.2 per cent to $127.95 and Bellamy’s surged 12.02 per cent to $8.20.

Treasury Wine Estates, one of the largest foreign suppliers of wine to the China market, swelled 3.6 per cent to $14.66.

26 Nov, 2018
Black Friday spend predicted to reach $1 billion in Australia

 

Australian consumers are expected to spend $1 billion online from Friday, November 23, to Monday, November 26, the four-day period known as Black Friday/Cyber Monday, according to CashRewards.

CashRewards founder and retail expert Andrew Clarke expects sales over the four-day period to nearly double last year’s figures. This equates to an estimated $1.3 billion in online spending, with the average spend per consumer expected to be $263, according to Black Friday Global.

In the US, where the Black Friday sales event originated, GlobalData Retail managing director Neil Saunders projected that total spending would rise by 5.7 per cent over 2017 to US$59.6 billion ($82.38 billion) – the highest growth since 2011.

“Online is taking a greater share of sales this year than last, with spend set to grow by 33 per cent. Stores will also see growth, but at a more muted 1.9 per cent,” Saunders said.

“Both rates of increase are the highest for at least the past five years.”

According to Numerator, 2018 has seen larger discounts across every category surveyed for the period, such as entertainment (34.5 per cent to 40.3 per cent), jewelry (62.9 per cent to 67.3 per cent) and women’s outerwear (56.8 per cent to 66.1 per cent).

Highs and lows

The increasing popularity of Black Friday/Cyber Monday sales in Australia can be seen in the record-breaking $5 million in sales that Catch saw on Friday, topping the company’s previous single-day sales record record of $3 million.

It can also be seen in the crash of JB Hi-Fi’s website on Friday, when servers proved unable to cope with high volumes of traffic.

“Yep. People want the goods. Our IT team is trying to get our servers together,” the company tweeted on 1.19 pm Friday, before getting the issue resolved by 4.13 pm.

According to IBISWorld senior industry analyst James Thompson, a crashed website during a peak sales event such as Black Friday runs the risk of disappointing consumers.

“This can both adversely affect sales, and leave consumers frustrated, with the potential to reduce consumer participation,” Thompson said.

Video games popular on Amazon

Online marketplace Amazon, which held its first Black Friday event in Australia this year, noted a distinct trend in the purchase of entertainment and video game items.

“Customers have snapped up deals across the board with video games and games consoles being the best-selling of all the deals on the first day of our Black Friday Deals Event,” Amazon Australia country manager Rocco Braeuniger said.

According to Amazon, the top deal over the period was “save 35 per cent off select video games,” with the best-selling video game being the recently released Red Dead Redemption II, followed by a discounted Nintendo Switch gaming console.

This trend translated into the toy category as well, with the Fortnite Edition Monopoly board game being the best-selling toy on Amazon for the period.

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