Overcoming Kiwis' fear of e-buying

Viv Wilson knows what it's like to throw money into the black hole of cyberspace.

The Auckland businesswoman is spending several thousand dollars upgrading the website for her pet accessory company, Petlogic.

Even without the need for the occasional major overall to keep the site relevant, maintaining an e-commerce operation is a costly business, she says.

Online transaction fees and the expense of a reliable courier service whittle away already tight margins.

"You don't find out about all these costs until you get into it," Wilson says.

"The main motivation for having an e-commerce site was to save money in terms of producing catalogues and things like that - being online it can be updated any time."

Her experience of grappling with the high cost of staying online is shared by hundreds of other local e-tailers and is reflected in OECD figures that show New Zealanders are not well served by e-commerce.

New Zealand has fewer than 15 websites for every 1000 people, compared with the OECD average of more than 30 (the leading nation, Germany, has more than 80).

E-commerce specialists say there are several reasons New Zealand is doing less local business online.

"The demand is not out there for people to buy things online," says Kyle Aspinall of online marketing consultancy Exceed Online.

"Every business in New Zealand could have a beautiful website all set up for e-commerce but at the end of the day if people aren't buying off them it's a waste of time."

Aspinall says the cost and logistics problems encountered by Wilson can be worked through and solved; the bigger constraint is that New Zealanders, even those who are web-savvy, remain reluctant to buy online.

Reasons for this include a fear they will become victims of credit card fraud, and older New Zealanders - those with disposable income who could be spending online - are not as computer friendly as those in the younger, but less wealthy, demographics.

Low broadband uptake in this country is also a hindrance to the development of local e-commerce, he says.

Greg Woolley, managing director of IT consultancy Certus, says many websites fail to meet the challenge of making it easier to buy online than it is to read a catalogue and pick up the phone.

"Most of the run-of-the-mill small business consumer websites you get in New Zealand are pretty awful," he says.

"It's a scale issue. You can't afford to invest hundreds of thousands of dollars into a really compelling website if you're selling into the wider population of the upper North Island."

Websites need to be "compelling" and offer more than just a shopping cart to attract hits, and building an attractive site is expensive, he says.

"There are a lot of people promoting drag-and-drop, wizard-driven bits of software that will create you an online shopping environment in five minutes, but they don't create a compelling website that you'd prefer to go to rather than visiting a shop."

Woolley says the image of local e-tailing was badly tarnished by the first major local venture, Flying Pig, which flopped in 2001.

"That fell down for a lot of reasons including capacity and back-end integration. It probably left a sour taste in quite a few consumers' mouths."

Aspinall agrees that most websites don't encourage visitors to open their wallets.

This is a global issue, but is particularly prevalent in New Zealand, he says.

The average conversion rate (the percentage of browsers who buy online as a result of visiting a site) is under 2 per cent in the US and lower here.

"If you had a call centre with a conversion rate of 1.8 per cent you'd fire them, so why should a website be that low?"

Some major national retailers still don't have websites, let alone an e-commerce facility.

"There needs to be a decision taken at a high level that a web strategy needs to be part of finding a new sales channel for the company," Aspinall says.

A website must be part of a company's wider sales and marketing strategy.

"It's not just about a website as a stand-alone site that takes orders. It's actually about delivering those orders on time and when the customer opens the box, there's a nice receipt in there, there's a 5 per cent discount voucher for the next time they come into the store."

He says many retailers lack the knowledge, drive and experience to make e-commerce succeed.

"There are no true multi-channel marketing initiatives put in by these larger companies - it's like 'let's whack up a site, and if we get some sales, good on it'."

Stephan Spencer, founder of Auckland web development company Netconcepts, agrees building an effective website is costly and says local e-tailers focused on a global market have been stung by the strong New Zealand dollar in recent years.

"There are a lot of improvements that could be made to Kiwi e-commerce websites in regard to usability, although there are some great examples of Kiwi websites that are doing a great job."

Spencer says e-tailers in markets such as the United States have better access to industry research findings and forums. In a larger market they can also experiment more, tweaking their sites to find out what appeals most to shoppers.

He says local operators are also not as advanced as US sites when it comes to search engine optimisation: the process of designing a website to rank highly for searches by Google or other search engines.

Wilson says upgrading her Petlogic site will mean providing more content to attract online shoppers and enable the company to function more effectively as a business-to-business distributor of products to pet retailers.

"Hopefully the process will save us money. People go online to look for information so what we aim to do is make the site a lot more informative for people. It's not just going to be a retail site, it's going to be primarily an information resource for people."

 

www.petlogic.co.nz