It’s been a while since we last spoke. What have been some of the biggest developments for Klika in the last eight months?
The last eight months have been a whirlwind of activity at Klika as we adapted to operating under the COVID restrictions whilst at the same time experiencing the explosion in online retail, and maintaining the level of service our customers expect from us. Being nimble allowed us to make strategic decisions and execute them quickly, which was really advantageous, as each day brought new operational challenges, especially in Victoria.
Some of our bigger developments included the rollout of next day delivery service for Melbourne based customers for bulky goods. The certainty of scheduled delivery ensured that our customers had one less thing to worry about in an already challenging environment and also assisted us to circumvent the bottlenecks and delays in deliveries experienced by some of our competitors.
We launched geo-centric messaging on our sites with customised messaging based on the visitors’ location recognising that the consumers’ shopping behaviour was being driven by where they lived and the restrictions imposed by their local governments. One example, promoting next day delivery for fitness equipment to Melburnians, as the local demand surged with the closure of Victorian gyms.
During the early stages of the pandemic, we introduced a contactless click-and-collect service for our customers, with changes made to our warehouse management system, scanners, and integration of a dynamic SMS service to interact with our customers during their order collection process. As all our systems have been built in-house, we were able to modify them on the fly avoiding the delays associated with outsourcing these modifications to external service providers.
Online retail has been experiencing history-making changes in the last eight months. What have been some of the most significant retail changes that Klika has seen in the year?
COVID has proven to be a significant catalyst for traditional retailers to make significant investments in their online capabilities, click and collect services and delivery networks, and I expect this to continue to be a part of their operations and investment strategies long after the pandemic is over, as consumers have now become accustomed to and will expect it going forward.
We observed the rapid pivoting of some of Australia’s largest traditional retailers to online retail, recognising and taking advantage of the monumental shift in consumer behaviour,
As a result, the ‘e-wholesale’ arm of our business, where we sell and deliver our products to end consumers on behalf of other retailers had experienced unparalleled growth, as we were engaged to assist these businesses transition to online retail and fill the gaps in their product and service offerings.
We also noticed the consumer shift to preferring to purchase locally, with the main drivers being the support of the local economy, delivery time-frames and after-sales service, and a lesser emphasis now being placed on discounted pricing offered by some of the overseas retailers.
Over the span of the pandemic, micro-trends have popped up within the retail space. How have consumer patterns changed from the start of the pandemic to now?
As consumers started working from home, we observed a change in the daily peaks of interaction and sales, historically concentrated outside of the usual office hours (i.e., lunch breaks and after business hours). Sales and sale-related queries spread out across the day, as people shopped online at their convenience rather than what their usual work commitments dictated. With the easing of restrictions and people returning to work, we are seeing that activity revert to pre-pandemic patterns with customers electing to shop online outside of normal business hours.
At the peak of the pandemic, we also noticed a greater than usual increase in consumers engaging external services for assembly of bulky goods, rather than choosing to assemble the products themselves, which we assume is a result of them being preoccupied with the daily challenges they were faced during the pandemic.
The online retail adoption this year was unprecedented, but definitely welcomed. What changes have you seen in consumer behaviour since the pandemic was announced?
The pandemic increased the online retail penetration in Australia which still lags behind countries in North America and Europe. More consumers who were historically reluctant to shop online found limited alternatives to sourcing their essentials from the traditional stores and experimented with online shopping, thereafter embracing it, which in turn meant that they then returned to online retail to purchase bigger ticket items. The direct consequence of this now is that we are seeing a new demographic of online shoppers transacting more confidently online, more frequently and with higher average order values, which I believe is a permanent shift in consumer behaviour.
As the supply chain disruption became more prevalent, consumers acknowledged the challenges experienced by local retailers and were willing to purchase products on a pre-sale basis and accepted longer than usual delivery times as the delays in the local deliveries took hold.
How will Christmas be different this year compared to others?
Online Christmas shopping is expected to peak earlier this year than in the prior years, due to customer anxiety of not receiving their orders in time for gifting, as a result of the recent delays experienced with their deliveries. To counteract it, consumers are expected to complete their online shopping earlier this year in an attempt to avoid the last-minute delivery bottlenecks.
Notwithstanding the earlier peak in sales, the performance of the local delivery networks will be tested with what is forecasted to be the busiest online shopping season in Australian e-tail history.
How does Klika plan to capitalise on the e-commerce boom this holiday season?
Our own portfolio of four sites and existing partnerships with key national retailers, and online marketplaces puts us in an enviable position to be able to capture a very wide range of online shoppers this holiday season.
In addition, the relocation to our 17,000sqm DC in Braeside has given up the ability to broaden our product offering and build up our inventory levels beyond the capabilities of many of our competitors, which gives us a significant advantage when we negotiate on strategic partnerships with key retailers.
As online shopping continues to expand, more Australians are planning to shop online and avoid stores. How does Klika plan to attract new customers during this time, and will there be a change in strategy?
With our expansion over the preceding years, we have invested in the performance of our systems, mobile versions of our sites and have engaged, SEM, SEO and personalisation specialists to assist us to attract and most importantly retain customers. Earlier this year our efforts were recognised as Klika won the Top Site Performance award at the Power Retail All Star Bash.
We are also actively pursuing strategic partnerships with online players overseas, as we are looking to enter the US and UK markets.
Fifty-nine percent of Australian shoppers are currently experiencing a delay in their online orders. Furthermore, 55 percent said they were concerned about potential delivery delays from their online orders. How do you believe Klika can accommodate the influx of online orders during the busiest shopping season and manage the delays in delivery?
During the height of the pandemic and operational restrictions imposed on bricks and mortar retail, it was a real test to our processes and automation as we had days where interactions with our customers and sale volumes spiked to circa 450 percent of our usual volumes.
It was pleasing to see that the investments in our infrastructure paid off, as we were able to accommodate this level of activity without the need to materially increase staff numbers, nor disrupt our operations whilst continuing to meet our SLAs.
As we head into what is expected to be the busiest period in online shopping on record, we will continue to offer next day delivery and click-and-collect services to our Melbourne customers right until Christmas eve, and leverage off our strong relationships with our pool of carriers to cater to the volumes we are expecting. Whist we expect the delivery networks to experience congestion, our strategy of diversifying the delivery services will ensure that we are in a strong position to accommodate the influx of orders.
Do you believe the adoption of online retail is a trend that will last? Why?
Absolutely! Whilst the online shopping activity seen during the height of the pandemic is easing as the country returns to a semblance of normality, I expect that the online shopping penetration in Australia will continue to grow as the pandemic simply accelerated the inevitable growth in e-tail, already seen overseas, and allowed more Australian consumers to experience its benefits, which they are unlikely to abandon.
Looking back on the last 12 months, what has been the biggest surprise for you, and what have you learned from the pandemic?
The biggest surprise has been the realisation of how rapidly normal business operations can be disrupted and the interdependence of regional economies on a global scale. This is something that I have been fortunate to not experience before and hopefully will never experience again.
From a learning perspective, it has been an eye-opening experience observing how rapidly our staff were able to adapt to the challenges we were faced with to ensure continuity of our business and being able to continue to deliver on our customer proposition.
What advice would you give retailers that have recently pivoted to online as a result of the pandemic?
To continue to invest in their online proposition to ensure that they retain the customers which embraced them during the pandemic and avoid them defecting to overseas-based competitors and online marketplaces.
What do you expect retail to look like in 2021? Do you have any forecasts for the retail industry?
Unfortunately, I expect there to be more financial pain and consolidation for traditional retailers which were unable to rapidly adapt to the shift in consumer behaviour, as the moratorium on insolvencies and government stimulus comes to an end.
Supply chains will continue to be disrupted as the manufacturing and shipping costs continue to increase together with the manufacturing lead times due to the pent up global demand for products.
I also expect the online shopping penetration in Australia to continue to grow albeit at a slower pace than the growth seen during the recent pandemic.
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