It shouldn’t come as a shock: e-commerce is still on the up. In Australia, it’s currently a $30 billion industry, growing at around 7 per cent a year and with over 17 million users. Globally, annual growth is closer to 10 per cent.
But who’s riding the wave of this booming industry? We look at two successful Australian e-commerce players – MTB Direct and Booktopia – that launched at significantly different stages of e-commerce’s evolution.
Shifting gears from physical to digital
Ten years before MTB Direct was founded in 2012, Michael Geale and Tim McCullough kicked off their retail business in something of an understated fashion. Underneath the family home in Brisbane while Michael was still in high school, they started a shop called ForTheRiders – this physical store went on to become an iconic part of the cycling community with a passionate following.
Along the journey, Jen Geale and Mel McCullough joined the team (and the bigger MTB Direct family was started, as it were). And in 2012, they launched MTB Direct as an online-only brand and ran the two businesses concurrently for about 4 years.
With changing life demands and the online business growing, they collectively decided to shift their focus solely on MTB Direct.
Jen, general manager and co-founder, tells us the why and the how of MTB Direct’s e-commerce story.
A personal decision and a strategic business move
“Tim and Michael had been running the store in Brisbane since they were in high school. Our lives were changing – Tim and Mel moved to Canada to spend time with Mel’s family for a few years, and we both had kids and wanted to have more flexibility in our schedules.”
“Having a physical store is something that is harder to work your life around – not impossible, but more difficult,” says Jen.
“We also wanted to get into e-commerce because we saw that the big opportunity for growth in retail was online. With our physical store, we were largely restricted to a certain radius, whereas online removes a lot of those geographic limitations.”
Taking things online
In their time running ForTheRiders, they explored tech solutions to everyday business challenges, such as POS software and inventory management systems, before taking on the development of the store’s website.
“We weren’t technical experts by any means, but we were beginning to learn some of the ins and outs.”
Through their everyday-business challenges, the MTB Direct team found themselves being drawn closer to the digital platforms that made doing business easier.
How the times have changed
Compared to Booktopia, MTB Direct’s entrance into the e-commerce arena was late – but even at the time, when they were ready to take things online, available software held them back.
“What we felt at that time was that there was a gap in the market for SME software,” says Jen. “There was entry-level software that was designed for businesses who wanted to pop their logo on a pre-made template, or there were larger, complex pieces of software that had annual pricing commitments and required significant technical resources.
“It was difficult to find software that was reasonably priced and allowed for flexible commitments but also suited a business like ours that was growing and had high aspiration,” Jen goes on.
The good news is that, even in a few short years, e-commerce has come a long way.
“Today I think this is less of a challenge. More providers are playing in this space, and that’s a great thing,” says Jen.
But changes in tech bring changes across the board, including customer expectations.
“When we started, it was ground-breaking to actually have items in stock and be able to ship them same-day. Now, that’s basically a given, and you have to set yourself apart in different ways. Our focus has been on customer service and owning our niche,” says Jen.
“I think customer expectations are getting higher every day.”
How SEO was (and is) integral
When asked about the importance of online marketing techniques like SEO, Jen is unequivocal: “It was what made us, in the early days! We made a sale the first day we pushed MTB Direct live, because somebody found us on Google.”
“For years, we did no paid advertising and relied a lot on organic traffic and word-of-mouth,” she says.
“SEO was one of the first things we focused on – we attended a bunch of conferences and read up on SEO techniques and made sure that our first website, while not perfect, was reasonably well optimised to rank in search.”
Jen agrees that it might be hard to predict where e-commerce and online marketing innovation will go next. Online, things change quickly. But the MTB Direct team will stay focused and adapt where they need to. “We’ll continue to meet customer needs and expectations in a world where buying online is increasingly the norm,” Jen concludes.
Jen Geale’s 5 tips for sustaining an e-commerce business
- Remember: people buy from people. “Never let the fact you are online distract you from the essence of what you are doing – which should be relational, not purely transactional.”
- Document all your processes, systems and how they work – from day one. “You will appreciate this as you grow and bring on new people to work on and in the business.”
- Hire a great team. “Find who knows more about a certain aspect of e-commerce than you do.”
- Embrace e-commerce as the perfect business to operate remotely. “We have a fully remote team (our entire team works from home around Australia, the US and Europe), and that has allowed us to scale easier than if we were locked into a certain office location.”
- Remember to look after yourself. “E-commerce can be 24/7 if you let it – it’s a lot harder to close the virtual doors.”
15 years of e-commerce success
Booktopia is an Australian e-commerce business that’s quickly becoming recognised as an Australian success story.
When Tony Nash, Simon Nash and Steve Traurig started the book-focused online retailer in 2004, they had a $10-a-day operating budget. By 2009, they’d increased their annual revenue to around $9 million. Today, Booktopia brings in more than $130 million per year, employs 220 staff and reaches 5 million customers.
Co-founder and CEO Tony Nash tells us about Booktopia’s impressive rise to become one of Australia’s great e-commerce success stories – and what it’s taken to endure 15 years in a nascent industry.
Looking back: E-commerce in 2004
When Booktopia launched in 2004, the ‘Internet’ – as it was styled then – was still very much in its teething stage. People were migrating from dial-up modems to broadband. There were no smartphones or devices beyond laptops and PCs. Social media was nothing like we know it now.
For Booktopia, this period “was exciting”, Tony says. “It felt like there were new boundaries being crossed. Broadband meant that the size of the pages could be bigger, load faster. The whole shopping experience was enriched around that time, and we were lucky to have started then rather than before.”
Tech-wise, the difference between 2004 and 2019 is vast. However, Tony says, the main constraints when Booktopia launched were more financial than technological. And with Tony’s background in programming, plus a brother-in-law who was an IBM software engineer, the company started on a fairly resourceful foot.
“I think the constraints were actually to our advantage, in that we didn’t go off on crazy tangents, building big things that may not have met the needs of our customers.”
15 years later, is it easier to start an e-commerce business?
“Yes and no,” says Tony. “There’s more competition, obviously – it’s more mature – but there are more people buying online.”
Tony says that while technology has made e-commerce more accessible to more people, there are still barriers to getting into the game.
“If you’re trying to squeeze into the market and the same products exist, then you need to invest a lot more today to get visibility for your site and business than ever before.”
That said, challenge and opportunity go hand in hand. “There are many other roads these days that lead to your site. Marketplaces are much more mature, affiliate programs are established, social media is here now.”
Modern systems and platforms also give businesses more opportunity to track their improvement and target the areas in their business with shifting demands.
“Back in our day, we really only had Google AdWords and SEO. They are still, of course, very important, but they’re not the only things around now.”
Today, “there’s a lot more focus on UX – the user experience, really analysing what people are doing on your site. And A/B testing certain fonts, or certain icons, or images, and working out whether this wording creates more conversions or gets more click-throughs. So that observation of customer behaviour is so much more mature, more important. It’s much more critical than ever before.”
The next 25 years
While it’s impossible to predict technology and consumer trends, Tony believes that the next step in e-commerce innovation will be less visible on the consumer end.
“It’s all about the automation and distribution centre,” he says. “It’s about having that customer promise and being able to get it out to the customer quickly. Holding more inventory and having all of the automation, and robotics, and system software.”
Tony Nash’s top 3 tips for surviving in an evolving industry like e-commerce
- Focus on the customers, not the competition. “We get a feel for where others are at, but we’re not focused on the competition. We have a horizon point that we work towards.”
- Cheapest is not necessarily the best. “If you can keep it in stock and get it to the customer faster than anyone else, that will always rank much higher than being the cheapest.”
- A double win-win is the best win. “You have to win, your suppliers have to win, the customers need to win, your employees need to win. If one of those groups is losing, then it’s win-lose, and it’s not sustainable.”