Australia's top 20 online retailers for 2013

It was the year when online retailing grew up. Though the industry has had the same debate for years, the last year has seen a huge resurgence in the way companies both large and small are dealing with digital.

A decade after shutting down its original digital strategy, David Jones has come back with a vengeance. The retailer, along with department store rival Myer, has spent tens of millions of dollars in buffing up its online presence.

But it isn’t just the department stores getting their digital chops dirty. Woolworths and Wesfarmers have started giving regular updates on online sales in their financial updates. Chains like Speciality Retail and Country Road are reporting sales increases, or actual revenue figures from digital sources.

Even though Gerry Harvey may still decry the use of the internet, Harvey Norman is turning over several million dollars.

That’s not forgetting pure play online retailers like Kogan, Shoes of Prey, or Appliances Online. These companies, like StyleTread, are not only making a huge stamp on the retail consumer space, but they’re demonstrating retail is able to attract serious venture capital money.

As Telsyte senior research manager Sam Yip says, it’s been a “very big year of change”.

“There have been players early in the space that have dropped out, and a lot of bricks-and-mortar retailers are doing more.”

“We’re not hearing any more Gerry Harvey stories; everyone acknowledges that this is the channel to be operating in.”

The debate over the GST threshold has largely disappeared, although the industry at large is still hopeful of some government relief. At the very least, most have accepted a 10% change in price isn’t going to help much of anyone. The smarter retailers are simply getting on with the job.

If there’s any evidence the online retail revolution is taking hold, look no further than Australia Post’s reaction. It is investing more money in parcel lockers and out-of-hours delivery services to cater for the huge amount of parcels being delivered.

So much so, the majority of its revenue is now being made from these types of parcel deliveries.

Experts believe online retail in Australia has tipped over the top of the hill, so to speak. The hard work is being done already. Now, Yip argues, the next challenge is to transition that success to platforms like mobile.

“The other big challenge here is around delivery. In the past year we’ve seen horror stories of where logistics have gone wrong, with people getting wrong orders all the time.”

“There’s a need to really refine that back-end logistics functionality.”

As in previous years, we’ve created a list based on a mixture of different metrics, including traffic data from Experian, revenue, and any sort of noteworthy achievement. Local divisions of global companies, such as Apple and Amazon, are excluded, along with auction sites such as eBay and Gumtree.

The list is not presented in any particular order.

The top 20 online retailers of 2013:

1. Kogan

If not the most popular, Kogan is one of the best-known homegrown online retailers in Australia. Mostly thanks to founder and CEO Ruslan Kogan’s insistence on putting himself and his business in the news through quirky – and sometimes weird – comments and campaigns. More recently the Internet Explorer tax got a mention in several international news outlets.

It’s difficult not to be impressed by Kogan’s reach. After shipping a single container of televisions five years ago, Kogan has transformed into a $250 million business with more on the way.

Spars with Gerry Harvey aside, Kogan has maintained a solid footing with Ruslan saying he’s “happy to be everybody’s first choice for a second television”. With a view to growing into a billion-dollar business, and expansion into services like mobile, Kogan will be around for a while yet.

2. Milan Direct

The other half of Ruslan Kogan’s online empire, Milan Direct was initially an odd proposition. Selling furniture online back in 2007 wasn’t done very much in Australia, if at all. But Dean Ramler and Kogan have managed to turn the business into a $12 million powerhouse.

The company’s success has spawned some eager competitors. But with growth of 100% last year, and international expansion ahead, Milan Direct  seems set to hold on to its strong market position for a while.

3. Catch of the Day

Perhaps the largest online retail success story in Australia, Catch of the Day continues to grow from strength to strength. After starting as an eBay business, Gabby and Hezi Leibovich have managed to transform the company into a $350 million powerhouse, complete with funding from one James Packer.

Part of the success of the Catch Group can be attributed to its savvy expansion plans. Rather than start a business for every category, the team has been able to pick up start-ups and nurture success from there. After expanding into grocery and wine, it seems natural the business could continue to thrive – and all signs are pointing to an eventual float.

4. Booktopia

Given books are one of the cheapest things to buy from offshore retailers, it’s surprising any local online store has managed to create a thriving business. But Tony Nash at Booktopia has been able to do just that, on track to turn over $28 million in 2012-13.

There isn’t much complicated strategy here. A focus on clean design, good customer service management and an ever-present need to reduce shipping times has kept Booktopia at the top.

5. JB Hi-Fi

One of the larger businesses in Australia to actually understand how online retailing works; JB Hi-Fi is making a good name for itself online. With more than $37 million in digital revenue in the first half of the year alone, at 2% of total sales, the company is proving itself as a good example for dedicated bricks-and-mortar stores heading online.

In fact, JB Hi-Fi perhaps encapsulates what retailers need to be doing online. With the ability to check stock, “click and collect” and some pretty fast customer service, chief executive Terry Smart seems to be doing a good job in transforming the iconic business into a powerhouse online.

6. Officeworks

Office supplies are a boring topic, but Officeworks has at least managed to make the buying process as easy as it can. After all, office supplies are something you should be able to buy online instead of heading to a store.

The company won’t confirm how much revenue the business makes online, although reports indicate it could be anywhere up to $150 million, equivalent to 13-14% of revenue. That’s an astonishing figure for an office supplies store, but it does make sense – the company understands how people shop online.

Just like JB Hi-Fi, Officeworks shows it understands how to not only get people browsing on a site, but makes sure it knows how to capture their money.

7. Specialty Fashion

While the retail and fashion industries obviously haven’t been having the best time, Speciality Fashion has been working on its digital presence – and it’s doing very well.

The company, which operates the Millers, Katies and Crossroads brands, recorded $11.3 million in online revenue during the first half of the year, representing 3.6% of total value.

While it isn’t the biggest online retailer around, the fact the company has been so successful with its digital push – and is willing to disclose just how much money it makes online – is a good step in the right direction.

8. Big W

While the company doesn’t divulge how much of its revenue is made online, the popularity of Big W’s site indicates it could be making quite a lot of cash. In any case, Woolworths is giving DealsDirect a run for its money with the Big W online store, which doesn’t have many frills but is focused on simplicity of use and cheaper prices.

9. BrandsExclusive

BrandsExclusive has been at the forefront of the private shopping club scene in Australia. The business, which has mostly focused on fashion, quickly found a loyal user base and has been growing ever since.

Perhaps the company’s biggest success has been its ability to leverage demand for private shopping networks into cash. Even last year APN News & Media announced a massive $36 million stake.

The business was aiming to turn over $70 million last year.

10. The Iconic

Although The Iconic isn’t one of the most established businesses around, and while it certainly isn’t divulging much with regard to revenue, it seems outrageous to leave the company off a list detailing the most important online retailers in Australia.

The business has made a huge splash in Australia with its bright marketing tactics, but it’s also gained a reputation for securing not only one $25 million funding round, but a second earlier this year.

The Iconic certainly has enough money to make a dent on the online retail market. It remains to be seen whether that success will continue.

11. Shoes of Prey

The customisable shoe retailer has made quite a name for itself. With plenty of attention from television shows, and some inadvertent celebrity endorsements, Shoes of Prey has ended up as one of the hottest brands in Australian retail.

Some funding hasn’t hurt, either. The company has taken money not only from Atlassian co-founder Mike Cannon-Brookes, but TechCrunch founder Mike Arrington. A partnership with David Jones is sure to increase the company’s reputation among the bricks-and-mortar elite.

Although revenue isn’t the highest in the online space, the company has definitely made an impression. It won’t be going away soon.

12. DealsDirect

The largest online department store, DealsDirect started as an eBay business. (Curiously, so did the other major retailer on the list – Catch of the Day).

The business has been expanding in recent years, buying a series of smaller retail-based businesses. Founder Paul Greenberg has a keen eye for businesses, and the people who run them. Although DealsDirect has been a success due its size, he’s been careful not to pack the operation with too much fat.

Greenberg is cagey on revenue, but the business is doing well over $100 million.

13. Get Wines Direct

The internet has triggered a boom for liquor sales, with plenty of retailers such as Woolworths, with its Dan Murphy’s brand. Get Wines Direct is topping the competition, making a name for itself as the country’s biggest online wine dealer.

Founder and chief executive Tony Sells has been busily promoting the company lately with partnerships and other deals. And it’s working – the company is turning over more than $50 million.

14. Groupon

While the group buying market has certainly fallen from its height, Groupon has kept a stronghold on the local industry. It’s the biggest player, (although Catch of the Day’s Scoopon follows closely behind), and has managed to maintain a foothold in an otherwise tumultuous market.

There’s no denying the pressure facing its parent company, but for now, at least, Groupon has shown group buying is truly well and alive in Australia.

15. Ozsale

The other half of Australia’s private shopping scene, Ozsale has been just as successful in establishing a dominant presence in the local retail sector.

Founded by Jamie Jackson, the company has succeeded in building a solid reputation. It’s been a busy year for the company, too, as it snapped up competitor BuyInvite back in June 2012.

The company isn’t slowing down plans, announcing earlier this year it’s gearing up for an IPO.

16. StyleTread

Another online shoe business, StyleTread is all about shipping. When the company first launched, SmartCompany spoke to the founders – who said shipping was their number one priority. The business raised $4 million back in 2011 from Nine Entertainment, and then won $12 million from more investors last year.

It’s a good strategy, given how frustrated Australian shoppers have been for some decent delivery times. As a result, StyleTread has continued to grow.

17. Dick Smith

Placing Dick Smith on a list of the country’s top retailers may be a controversial move given what’s happened to the company. But despite Dick Smith’s downfall, it still maintains an extremely popular online presence.

Why? Because it has the basics down pat. The ability to reserve products, and check individual stores for stock levels is a must. It’s simply a well-designed website, the importance of which can never be overstated.

18. Appliances Online

It was only a few years ago the retail industry felt confident in saying people would never buy large, bulky goods over the internet. The arrogance with which that statement was made has all but washed away, and John Winning’s Appliances Online is enjoying the fallout.

At $20 million a year, Appliances Online is on the smaller side but no less important. The company’s success shows Australians are willing to buy anything over the internet, as long as they’re given enough detail and enough confidence in the seller.

While it might be a while before the practice becomes mainstream, Winning and his Appliances Online team have achieved what many thought would be impossible – and have made money at the same time.

19. EB Games

Although plenty of consumers are heading offshore to source cheaper video games, EB Games has managed to maintain a strong foothold in the local sector. A solid website, a savvy social media team, and a thinning market thanks to the collapse of GAME, have all ensured the online division of EB Games is doing just fine.

20. Westfield

It’s been a couple of years now since the shopping giant announced it would create its own online hub for shopping digitally. Now, it’s one of the most popular online retail destinations in the country.

It was a smart idea. The site combines deals from various stores located in Westfield shopping centres. A savvy website, along with the ability for free delivery and returns in-store or online, has kept Westfield in a strong position online.

This article originally appeared on SmartCompany.