Digital disconnect on Australia's ecommerce capabilities

Two reports this week present starkly different pictures of Australia's capabilities in the area of eCommerce.

First off came the eBay sponsored Economist Intelligence Unit's report The G20 e-Trade Readiness Index "a quantitative index ranking of countries on the degree to which they encourage—through policy, regulation and infrastructure—cross-border trade using the Internet."

The index comprises more than 40 indicators across five thematic categories: investment climate, Internet environment, international trading environment, regulatory and legal framework, and the environment for e-payments. These categories are weighted according to EIU assumptions of their relative importance in facilitating cross-border trade using the Internet, especially for small and medium-sized enterprises (SMEs).

And, surprise, surprise, Australia came out on top. "Australia is best prepared to grow global ICT-enabled commerce," the EIU concluded. "Australia ranks top in the e-Trade Readiness Index based on strengths across all five categories measured, particularly in the Internet environment and e-payments environment. Australia has affordable Internet access, a well-developed regulatory framework for commerce, high usage of electronic payment methods and high smartphone penetration."

Its explanation for this was in part that "Geography and history ... seem to encourage the development of e-trade—three out of the top five countries (Australia, the UK, Japan) are both developed and island nations whose economies have long relied on international trade." It added: "Australia can continue to improve should it have more competitive domestic and international shipping systems."

The logical extension of these findings is that Australian businesses, especially retailers, should be at the leading edge of digital especially in the export market. Alas the opposite is true, at least according to Australian Digital Commerce, a report from the Australian Digital Transformation Lab, a joint venture between The University of Sydney Business School and Capgemini Australia.

Its key findings make depressing reading.

- Australian retailers face a double relational gap; not only is building lasting customer relationships the weakest aspect among Australian retailers, a large gap also exists between the relational capability of Australian retailers and that of their counterpart international market leaders.

- Given the strength of international competitors in building relationships, there is a real risk that Australian retailers will lose its customers, and will lose them permanently. While excellence in digital execution has become a strategic necessity for Australian retailers, engagement in relationship building and social commerce is where the competitive game is now played.

- Thirty eight percent of all Australian retailers are classified as ‘Laggards’, who show poor implementation of digital commerce functionalities in both the execution and engagement dimensions.

- Only twenty-six percent of Australian retailers share the ‘High Achievers’ category with international market leaders, displaying excellence in both execution and engagement.

- Closing the gap will require improvements in omni-channel integration and effective utilisation of customer data, in order to foster execution and drive engagement.

The report does not offer any explanation as to the underlying causes of these conclusions and its recommendations are really in the "must do better" category.

"While some Australian retailers are catching up with their international competitors, the majority have work to do in all aspects of digital commerce. ... The key to excellence in execution is effective omni-channel integration. ... The key to excellence in engagement is the utilisation of customer data to derive individualised offerings."

LivePerson is a US based company that plays in this space - it operates a cloud service that adds web chat functionality to web sites and Dustin Dean, VP and general manager for Asia Pacific and Japan - who has run the Australian arm since it was set up three years ago - sees some more fundamental problems, although he admits to having no real data to back up his observations, made by contrasting the local scene with that in the US and elsewhere.

"Especially in the retail vertical I see a relative lack of execution expertise in the e-commerce sector in Australia. It is pretty hard to find people who are knowledgeable and upskilled in the execution of digital strategies." He adds: "If you find any validation to this I would be interested to know."

I also would be interested in any comments. In the meantime, if retailers are struggling with digital expertise - Dean's advice is for them to look overseas, recruit a high level executive and then "their expertise will percolate down through an organisation, but it will take time to educate people in general."