Australian e-tailers facing road blocks from suppliers: eBay survey

Stan Beer
Monday, 21 March 2011 10:42

IT Industry - Strategy

Australian online retail businesses are facing road blocks from bricks and mortar suppliers who are trying to prevent their products being sold online. This is the finding of a new e-commerce survey from eBay.

According to eBay's second Online Business Index (OBI), 78% of respondents had experienced difficulties with manufacturers and suppliers who tried to prevent the sale of their products online.

The research revealed that:
'¢         35% faced issues with manufacturers/suppliers trying to prevent them from selling their goods on the internet or on particular websites
'¢         25% were required to sell their products at or around a particular recommended retail price
'¢         22% experienced unexplained problems from manufacturers or suppliers which they suspect was due to selling their products over the internet

Kirsty Chapman-Smith, co-owner of Deals4Kids, a South Australia-based party supplies company is expected to turn over $450,000 in 2011, up from $250,000 the previous year.  Chapman-Smith says her company's growth has not come without its share of challenges, which include issues with suppliers who do not sell to online retailers.

'Many suppliers I've spoken to don't want to lose the business of long standing retail partners, despite the fact that more and more consumers are moving online to make their purchases. It's become an issue of both loyalty and adapting to new sales channels. Suppliers should be working to promote a healthy and competitive retail environment, which benefits consumers and gives them increased selection at competitive prices,' Ms Chapman-Smith said.

Despite the hurdles, however, optimism among Australian e-tailers is booming, according to the eBay survey.

69% of respondents, among the largest sellers on eBay.com.au, said that they were optimistic about the business outlook for the coming year - a slight increase over 2010. Indicative of this optimism, online businesses expected to increase staff from an average of 4.4 paid employees to an average of 6 over the next 12 months.

Deborah Sharkey, eBay Vice President, will today launch the 2011 OBI with Senator Stephen Conroy, Minister for Broadband, Communications and the Digital Economy, at Parliament House in Canberra.

Ms Sharkey said: 'Turnover for the top 2,000 Australian businesses on eBay.com.au grew by 38% in 2010, clearly demonstrating that consumers have a robust appetite for domestic goods and for purchasing online. Research demonstrates that one of the main reasons Australians buy online from overseas-based sellers is due to many popular products not being offered online locally. Restrictive practices by manufacturers and wholesalers, uncovered in the OBI research, mean that local businesses are unable to offer the full range of goods their customers want and that needs to change,' said Sharkey.