Home' MHD Supply Chain Solutions : MHD Mar-Apl 2017 Contents R
etailers embracing cross-border trade
(CBT) or not, has been a recurring theme
of my recent opinion editorial pieces.
And the rise-and-rise of Amazon.com has also
been a dominant theme.
It is well known that a number of the larger
established retailers in Australia are hoping
that Amazon doesn’t set up shop in Australia.
(Although as I have argued, they are already
doing a lot of business here, but have resisted
opening up large fulfilment centres as they have
done in the USA and Europe). It is rumoured
that some of our larger retailers have dedicated
teams internally that are focused on the Amazon
play, and how they will strategically respond.
But as is often the case in business, by
being, well, overly focused on the ‘threats’, we
can miss the opportunities.
Another business officially opened its offices
in Melbourne in early February, and celebrated
with a lunch ceremony to which I and other
players in the retail ecosystem were invited.
Supply chain, retail, government, associations
and business councils were all represented. That
business, also beginning with an ‘A’, presents to
Australian retail arguably the greatest opportunity
of our time. Jack Ma and the Alibaba Group are
reimagining and reinventing global trade and,
using connected technology, are proving to be
the ultimate link, not only of China to the world,
but also the world to China.
The Alibaba Group, like Amazon, is made
up of a number of different parts. The original
Alibaba model was an online portal where retail
buyers could connect with Chinese wholesalers.
Since those early days it has morphed to
include a luxury online mall, TMall; a vibrant
consumer-to-consumer marketplace, TaoBao; a
significant player in the payment space, Alipay;
and along the way, invested heavily in supply
chain, including a big stake in Singapore Post.
All these businesses provide valuable and
increasingly integrated links to dealing with
Chinese consumers. And we know that the
middle class Chinese shopper numbers around
three hundred million currently, and is expected
to grow to half a billion by 2021. Accessing the
Chinese market is not easy, but getting easier.
If good retail is about retaining customers and
acquiring new ones, we have broadly, a problem
in Australia, with our small population size. While
growing, it is nowhere near the numbers of China,
India, Indonesia and other lucrative markets.
My concern with a ‘finite pie’ is that when one
retailer wins, another loses. A number of senior
retailers are expressing the view that at best we
can expect retail over the next five years to track
CPI. I struggle to accept this fact, and if cogent, it
means we urgently need to grow our addressable
market. So, whilst of course Amazon has, and
will, continue to change the landscape, let’s keep
ears and eyes out for the opportunity.
This has not been a good week for
Australian retail news, with four well known
and established fashion brands calling in the
receivers. When digging around what caused
the failure, I was told by their retail leadership
that it was the influx of offshore brands setting
up shop in Australia. Both online and instore.
I have only one response, with respect, to
those retail leaders. And it is this: “Don’t get
mad, get even!”. There are rich markets on our
doorstep and beyond. And they are opening
up quickly. If you haven’t got your share of the
action, you are missing out on the next gold rush.
This fact was illustrated by one of Australia’s
great retailers, Solomon Lew. As the week of bad
news unfolded, he advised the market that his
listed Premier Group was experiencing very good
growth. Clearly, the jewel in the crown is the
Smiggle brand, which is growing at warp speed
internationally, and it’s growth is outstripping his
well-established local only brands.
So if our savviest retailers recognise the
opportunity of the flat world, why are more of
our best and brightest not going global? Well, it
is harder for those aggregators of global brands
to go global. Many of their business models are
built on local licence arrangements.
My sense is that the main impediment, though,
still lies within the supply chain and logistics
frame. So much of our work in eCommerce has
been around solving the long-haul and last-mile
delivery challenges of our massive continent
with its small population. Arguably, the global
play has even more challenges. But I believe the
market over time solves all problems, and if the
opportunity is as big as I believe it is, businesses
in your industry will rise to the challenge and to
optimise the opportunity.
As the great Albert Schweitzer once wrote:
“One who gains strength by overcoming
obstacles possesses the only strength that can
Paul Greenberg is the founder and executive
director of NORA.org.au
THE BIG ‘A’ IS HERE,
AND IT’S NOT AMAZON
“My sense is that the main impediment, though, still
lies within the supply chain and logistics frame.”
Alibaba has physically
arrived in Australia,
establishing an office
MHD SUPPLY CHAIN SOLUTIONS — MARCH / APRIL 2017
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