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Distribution wins return sales online

Simon Evans (via AFR) | July 16, 2013
Online retailers are building glittering websites as they attempt to claw away a higher share of the $225 billion spent by Australian consumers in the retail sector each year.

He expects real consolidation over the next three to five years.

He says the most important element for business success is a high-quality, efficient distribution and delivery network that ensures customers are always happy.

"It's the biggest plus."

Winning Appliances is a somewhat unique business because it had a substantial distribution and delivery network in place first, prior to setting up retail showrooms. This was a legacy of Winning's family holding the distribution rights for Simpson whitegoods decades earlier, which they subsequently lost.

"They ended with a warehouse and distribution system but nothing to deliver," he says. That existing infrastructure became the basis of Winning Appliances' superior distribution system. "We had a logistics business that happened to sell appliances."

Winning says one of the big advantages is that he has ownership of the delivery business, which has 70-plus trucks operating from seven warehouses in Sydney, Melbourne, Brisbane, Perth, Adelaide and a two-person crew in each vehicle to ensure customers are content, and their big-ticket item purchases are installed and working correctly.

Winning estimates warehousing and delivery represents around 50 per cent of his total costs.

But it is proving a godsend, in driving sales growth of more than 50 per cent in the past year from the online businesses, on top of 100 per cent sales growth in each of the previous four years.

Greenberg says the Winning Group is an example of the success that can be derived from a retail business operating from multiple channels, and that many shoppers like having the choice of how they interact.

"Customers want multiple access points to a brand," Greenberg says.

Greenberg, who came to Australia in the mid-1990s from South Africa and set up a business selling guitars on eBay to the rest of the world before setting up DealsDirect, says a poor experience with delivery and logistics can wreck the online buying experience for a customer. "It's got to be seamless and frictionless. There's all the belts and braces, and the ball can get dropped in the delivery piece."

He says the importance of Australia Post in the growth of online retailing in Australia can't be understated and "they are a core pillar of the new retail."

The Iconic's Jacobs says substantial investment in distribution and delivery has been one of the main factors in driving growth. He says The Iconic has 4 million visitors per month to its site, but he declines to detail how many are making purchases.

The delivery options, which includes a three-hour delivery service in Sydney, are appealing to customers and essential in increasing the "re-purchase rate"'. This is the measure of repeat business, and Jacobs says it's tracking well. "That's the real key to being a sustainable business," he says.


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