Why You Need to Reach Customers in Australia

australia-flag-square-button-150Ecommerce in Australia is booming. Total online sales for 2013 were $37 billion, up a startling 37% over the 2010 total of $27 billion. Moreover, this trend is expected not merely to continue, but to increase; current projections call for Australian ecommerce sales to total $64 billion in 2016—double the volume of 2010, and a three-year increase of 73% over 2013, according to Australian marketing firm Merlin FX.

In many ways, Australia is a natural for ecommerce. With 36 million people spread across a continent, it has one of the lowest population densities in the world. Australians are accustomed to long-distance shopping, and they are also highly computer literate and wired: 94% of the population has Internet access, 79% are online every day, and 60% are on multiple times a day, per Australian retail publication PowerRetail. The country is also prosperous; Australia ranks fourteenth in the world in gross domestic product per capita, just below the Netherlands, according to World Bank.

However, cautions Payscout Inc. CEO Cleveland Brown, for U.S.-based merchants, expansion into Australia comes with a certain amount of risk, as it does in any foreign market.

“The Australian ecommerce infrastructure is still developing, and bank procedures and capabilities vary,” Brown says. “Risks can include delay, excessive rates of declines, and in some cases the inability to complete transactions.”

In addition, although ecommerce forms an increasingly large part of the Australian economy, there are surprisingly few laws specifically governing Internet commerce in Australia. Instead, transacting by the Internet is covered by a range of laws in the areas of consumer protection, privacy, spam, and copyright—and website owners and retailers need to be compliant with these laws, according to Australian business publication InTheBlack.

Furthermore, some basic details of Australia’s famously complex tax system are being debated in the Australian Parliament due to Prime Minister Tony Abbot’s proposal to restructure the financial relationship between the central government and that of the states.

Meanwhile, change may be in the winds for the overall Australian banking system. Glenn Stevens, governor of the Reserve Bank of Australia, recently commented that the central bank’s role in maintaining credit and debit card systems was due for review and possible revision.

One component of the Australian payments system with which U.S.-based merchants may be unfamiliar is eftpos, which stands for electronic funds transfer at point of sale. eftpos is Australia’s most popular debit card system by transaction volume; it is owned by a consortium of 13 Australian and New Zealand banks and card issuers, plus two retailers, Coles Group Limited and Woolworths Limited. Plans are currently in the works to allow eftpos to be used for online purchases. Due to its wide acceptance by Australians, it will be essential for merchants operating in the Australian market to use a merchant service provider conversant with the system and its security requirements.

“None of these developments should deter U.S.-based merchants from doing business in Australia. Australia is a prosperous country with a vibrant consumer economy, a booming ecommerce sector, and a long history of openness to American ideas and American goods,” said Brown.

A recent survey of Australian consumers, in fact, shows that 19% do their online shopping most often with overseas vendors, and 29% divide their shopping equally between Australian merchants and those from overseas. This trend appears to be growing, most noticeably in neighboring New Zealand, where online consumers now buy 34% of their goods from abroad, up from 26% a year earlier, according to Nielsen.

Payscout maintains that U.S.-based merchants wanting to do business in Australia would benefit from a global merchant service processor (MSP) that understands the complexities of the market and can help them manage risk while capitalizing on a truly spectacular growth opportunity.

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