From music to fast food, more Kiwis are choosing to shop online. But retailers need to provide good, old-fashioned service, reports Steve Hart

How is a Kiwi business to achieve global domination from the bottom of the Earth?

Thankfully, we only have to look at the world's largest online retailer for a clue.

Amazon, a Seattle-based Fortune 500 company's net sales were US$12.80 billion for the six months to June.

But in 1997 the company was on its knees as it over anticipated people's confidence in typing their credit card number into a web page to buy a book and was let down with slow deliveries to customers.


The public's mindset about buying online has changed to allow firms to sell goods of every description online - from music downloads to fast food.

Closer to home, retailers expanding and developing their online presence include The Warehouse and Pumpkin Patch. Both are hoping the net will increase business and help them connect with customers who might not have easy access to their physical stores.

The Retailers' Association is encouraging its members to do more online, while pressing the Government to close the import loophole that allows people to avoid paying tax on anything they buy that falls below the current $400 limit.

However, Customs wants the import rules relaxed, to allow an additional 22,000 items to be brought into the country tax-free each year.

"The ability to purchase items not available locally seems to be a very significant driver to buy overseas, highlighting the opportunities that could be available to New Zealand retailers if they can tap into this market," says Tony Boyte of Nielsen media research.

There's no doubt that people are increasingly shopping online, not only because it is more convenient, but because not all people in New Zealand live near a main centre selling the things they want. However, competition is fierce.

It is not just hard-to-get luxury items that are bought online - weekly groceries are popular too.

Nielsen's Global Digital Shopping report, which was released in August and includes data from New Zealand, shows online shopping for food and beverage categories increased 4 per cent in two years.

Some 60 per cent are using the net for grocery shopping research, 49 per cent bought a product online and 46 per cent use social media (such as Facebook) to help them decide what to buy.

According to the report, 37 per cent of respondents frequently buy from online-only stores - an increase from 34 per cent in 2010.

Survey data prepared by the Interactive Advertising Bureau shows that online shopping in this country increased to $2.68 billion in 2011 - an increase of 12 per cent on 2010.

However, 34 per cent of total online sales in 2011 went to offshore online retailers and in terms of revenue, 5.1 per cent of all income for Kiwi retailers came via the net.

It is also worth noting that online shoppers are not just using their desktop computers to make purchases. Smartphones and tablet devices are key drivers of growth in online retail sales; social media is an integral part of the mix with 34 per cent of all shoppers following an online retailer on Facebook - home of the world's biggest community.

The good news for traditional retailers, according to Nielsen, is that 22 per cent of those surveyed for its digital shopping report prefer online companies that also have bricks and mortar stores.

There is a word of caution for retailers champing at the bit to throw up a website for their cut of the $2.68 billion annual booty. Online retailing takes work, particularly when it comes to customer engagement and building relationships with shoppers.

According to Nielsen, retailers have to focus on the right shopper because not everyone is prepared to buy online.

It says consumers have a wide array of choices and retail marketers need to focus on the medium that provides the best return on investment.

It advises store owners to think about product usage and devise strategies that speak to the needs of consumers. It's all about engagement and relevancy.

"Pair mobility with need and create apps that, for example, make it easier to create a shopping list, refill prescriptions or navigate a store," says its report.

"Whether the platform is online, mobile, social or in-store, prioritise the medium based on the impact it drives and the feasibility of deploying it. Digital can be complex, but rewarding if done right."