Within fashion, pure-play sites had 57.2 per cent of the Australian market in the last financial year.
The highest profile of these is of course The Iconic. However, while their efforts were being lauded by the mainstream media as the great success story of Australian e-commerce, the company has reportedly lost $45 million in around 17 months of operation.
On top of this the entire business only generated $31 million in top-line sales in that same period.
The company has only stayed afloat after raising tens of millions from its parent companies.
Their positive bleatings in the press have also been questioned by others in the ecommerce game.
Adam Schwab, the managing director of the AussieCommerce Group, parent of online retailers including Cudo and Deals.com.au said the company was only receiving a fraction of the unique visitors it claimed.
It’s interesting that most of the mainstream press has either ignored The Iconic’s precarious position or glossed over it, but it doesn’t seem to fit their narrative of the internet being the death of bricks and mortar.
I won’t shy away from the fact that I have often said that The Iconic is an example of ecommerce done well, however, while I have always championed their digital infrastructure (site design, ease of ordering, ease of returns, business terms etc) I have been less enamoured with their aggressive marketing and clear targeting of the market share held by the department stores.
It is a classic investment banking approach to retail. We have seen it before in bricks and mortar with the proliferation of high street outlets (build it and they will come). But instead of square metres, The Iconic has been spending on advertising like a drunken sailor in an effort to get people out of stores and onto their website.
Their campaigns have been very questionable. The Bondi Hipsters? What do they have to do with their core brand offering (which consists of fast, free shipping, large range)? Maybe it’s a Sydney thing but I found the campaign irrelevant and grating. The focus of the ads, (in case you missed them) was that online retailing is so much better than traditional retail because of X,Y and Z. Well, that’s great, and that’s why internet retailing continues to grow at double digit figures annually, however it still only represents a fraction of the overall market.
Their strategy of trying to convert the unconverted was a waste of time and money. The Iconic should focus on dominating the platform they are in, not trying to turn people away from other methods of retail, otherwise they are no better in terms of internet business strategy than Gerry Harvey.