Adam Turner
Technology Journalist

Adam Turner is a Sydney Morning Herald senior technology columnist who has been writing about the challenges facing Australian business for more than a decade

Adam Turner
Technology Journalist

Adam Turner is a Sydney Morning Herald senior technology columnist who has been writing about the challenges facing Australian business for more than a decade

In the saturated markets of today, businesses need to look for ways they can stand out. Can innovation help save an ailing industry?

The 1960s were a great decade – from The Beatles to The Stones, and the massive investment by American car makers into Australia. We also had vinyl records and the transistor radio. Television sets had rabbit ears so that you could stand on one leg and lean over to get the best TV signal.

But the three most valuable companies in the world – Apple, Google and Microsoft – were yet to exist. It’s of little surprise that we’re witnessing the demise of many of the stars of the ‘60s – the biggest one being the automotive manufacturing industry.

Drawing of lit up lightbulb

Where we're going, we don't need roads

Yet, auto manufacturing isn’t dead, despite some of the biggest brands pulling the plug on their Australian plants. Other manufacturers, such as Tomcar Australia and the Volvo Group, both plan to continue manufacturing in Oz by focusing on niche and customised manufacturing. This specialisation helps them compete with low labour wages in Asia.

Looking at Tomcar’s strategy in more detail, they’ve recognised that innovation is the only way forward when operating in a saturated industry, and adopted a strategy that thinks outside the box. Rather than using the traditional model of relying on legacy dealer networks to drive vehicles out of the floor, they sell cars directly to customers online. 

The company has chosen to sell via a distribution system that’s in line with wider internet retail trends. Their website offers abundant information, videos and links – with plenty of shareable information. In effect, it’s an ecosystem where people can get all the information they need online, rather than having to visit dealers.

But it’s not just auto manufacturing that is being disruptive by external forces. Retail, particularly the fashion industry, is experiencing a looming shakeout. 

Technology online has made it relatively easy to start a business. Yet it’s harder too. You have an app for everything today! The adaption of technology is so rapid.

- DAVID VITEK, VITEK TECHNOLOGIES

Fashion forward thinking

Look no further than the internal ructions at both David Jones and Myer which were very late in moving into the online environment. Now market observers are suggesting a merger as a way of rescuing shareholder value. Fashion retailers have few competitive advantages compared to businesses in other industries. 

With the increased penetration of the internet, entering the market is as easy as using offshore manufacturers, and a new business’s to-do list would consist of building a well-designed website and developing a decent online marketing strategy. As a result of this competition, retailers pinning their hopes on fashion will have to execute exceptionally well to deliver similar returns to years gone by.

David Vitek founder of Vitek Technologies, which operates online directories in Australia, New Zealand and the United Kingdom, says that the speed of change continues to increase which it makes it difficult for businesses and their products to stay relevant.

“Technology online has made it relatively easy to start a business. Yet it’s harder too. You have an app for everything today! The adaption of technology is so rapid. The iPhone, for example, its adoption was much quicker than previous (technology innovations).”

“Being the first mover is not necessarily a competitive advantage. Followers can be more nimble and access cheaper technology and thus operate from a lower cost base,” he adds. 

To remain relevant to time-short consumers, business models will need to adapt to a multi-channel world. If you look at both David Jones and Myer and compare them to the US-based business Zappos and Australian business Winnings Appliances, you have a clear message that bricks-and-mortar businesses, regardless of the products sold, are threatened by technology and/or the migration of buyers online.

The digital realm

Zappos sells nearly all its shoes and related goods online and does so with customer support staff, who are highly focused on delivering customer satisfaction. Despite selling bulky whitegoods – refrigerators, washing machines, ovens and the like, John Winning has built a thriving business that, again, is customer service oriented. 

Winning claims his company is now the Australia’s largest online retailer of white goods and appliances and says the company delivers to 98% of the country with next-day free delivery to most metropolitan areas. 

He says online should deliver an equal to if not a better customer experience each and every time.

“A customer can go and shop around, either by visiting three or four stores getting quotes, haggling and all that; we say we can, from the outset, deliver the best deal.”

Verdict

Technology has forever changed the speed at which we do business. Now we do things at the touch of a button - shop, chat, study, transfer money. Yet, some business owners seem stuck in the past, so it’s important to look to other ways to innovate, grow, and provide ways to keep customers coming back.

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