Analysis Of Online Liquor Industry In Australia

Selected e-business

The past decade had been an online boom in the Asia-Pacific region in ecommerce. Australia is the centre point of this with the highest level of growth in ecommerce market. Last five years of expansion has resulted into change in retail operation that used to be carried out. Jackthreads, a male fashion retailer states that, being mobile first and having strategies based on multi-platform is equally important as selling quality goods. Their online sales in 2017 are forecast to exceed $32 billion which put them in tenth position worldwide. In case of Australian ecommerce market, strong economy and infrastructure plays important role rather than number of customers (Monteiro, Swatman and Tavares 2013). The reasons that put Australia ahead of other Asian countries are high internet usage, rise of handheld devices, preference for shopping online, strong economy and better infrastructure (Tatnall 2014). With the recent development in the ecommerce market, it makes Australia a perfect place to open ecommerce business. Various retailers comment on the fact that, the customers tend to go more for online purchase than going to the shops. In the report, a theoretical discussion will be made on the chosen industry. Goals and values will be set for a new business and target markets will be set.

Online liquor industry in Australia is at its infancy, which makes it a perfect market to start an e-business. The number of consumers and the demand of the product is gradually increasing every year pages (ibisworld.com.au 2017). The company will be selling the Australia manufactured liquors. Wine will be in the center of the business keeping the demands in mind of the target market. The price range will be from $ 39 to $46 making it cheap and affordable. Some of the brands that the company will be dealing with are Wolf Blass, Lindemans, Penfolds grange, Rosemount, Hardy Wine Co., jacob’s Creek and others. The whole idea of keeping the price low is to make it affordable to the middle income section of the country. The company is planning to provide a free delivery service and it will be operating on country level. Customers will be eligible to opt for the fast delivery in exchange of a minimal charge. Company will also be taking orders for special occasions such as wedding, office and house party in a prior notice of 1 day before the event.

As a start-up e-business, first goal that should be set is to make the company present in important social media networks. This is required to make the customers aware of the company and lure them to visit the website. More the target population sees the ad, more they get to know about the benefits and offers the website is giving to the customers.

The second goal of the company should be to start and expand the business territory at the country level. The products should be available to every part of the country with potential fast delivery.

The third goal of the company should be to gain the loyalty of the customers. Every company needs a number of loyal customers, who seeks nowhere but a particular company for a particular product. More the number of loyal customers increase, more the market share increases. There can be different ways to gain the loyalty of the customers, like, promising quality product, fast delivery, unique products, range of opportunities, discounts and many more (Turban et al. 2015).

Goals

There can be a single or multiple strategies for any business. As a start-up, the company will be using Cost Leadership Strategy to attract the customers and to grow the market share. The company will be projecting itself as the cheapest distributors in the market by selling the products at lowest price in the market. This is a strategy hard to maintain, as it has to provide high quality good at a low price. But this will definitely be useful for making its presence in market (Elahi, Fazli and Asadian 2014).

To catch up with the existing businesses in the market, it is important to do something out of box, what others lack in. The business should promote only liquors that are ethnic and Australian origin. This will have a sentimental touch in the customers’ heart, which can bring customers for not only once, but to become loyal to the company. The cost of the liquor can be kept low from foreign one which will attract more customers as a large portion of the Australian population turn towards low cost alcohol. The second most important thing that needs to be taken into consideration is the fast delivery. Customers are ready to pay more for fast delivered products. As the selected e-business is to provide liquor online, the customers would like to have their order delivered as soon as possible. Hence, the fast delivery should be given foremost priority. These two things should be taken into consider to grow and compete in the target market (Amblee and Bui 2014).

Online adverting will be used for the revenue generation of the company. The logic behind selecting this particular model in the start-up company is to balance the loss that will occur due to using the Cost Leadership strategy. Here, the revenue will be generated from the companies that will buy advertising space on company’s website (Fisher 2014).

Different analysis needs to be done on the various grounds before establishing any business. It is applicable for e-business too. Different analytical tool are used for this and the targeting of the market is done on the basis of the analysis report. Market Segmentation will be used to analyze the market and targeting for the e-business.

Market segmentation is used to identify the target market and the opportunities for a company in it. It is a useful tool for a start-up company to study the market and set their targets accordingly.  Four important aspects of any given market are studied under the segmentation analysis. They are psychographics, demographics, behavior and geographic (Cross, Belich and Rudelius 2015).

This particular field of segmentation studies the lifestyle, interests, opinions, values and income of the population under study and how these factors can influence the market of the product (Brian 2015). In Australia, alcohol consumption is common in every household. Due to different competitors existing in the market, the customers grew the bargaining mentality to get the products at low price. As the company is planning to sell the country liquor to the customers rather than foreign one, the price needs to be set low which is perfect for selling them to the middle income group as they are potential buyers of the product.

Ecommerce Strategy

Due to different laws regarding alcohol selling and consuming is prevailing in Australia, only a portion of the population is availing them. By Australian law, the minimum age limit for consuming alcohol is set to 18years which restrict them from selling or purchasing any kind of alcohol products to the minors (Callinan, Room and Livingston 2014). Apart from that, the rest of the population is allowed and interested in consumption. In Australia, 26-40 age bracket is the potential alcohol drinkers and share the highest share. They are also characterized as having a high technology adoption rate, which is also a considerable point in this industry (Cross, Belich and Rudelius 2015).

Australia has well connected road and air transport system. Every populated portion of Australia is well developed in case of transportation. Hence, it would not become a challenge for delivering the products to the customers. The business will make more profit if it can operate around the country, making it accessible for the entire population of the country (Bruwer et al. 2017).

This will help to understand key strengths, weaknesses, opportunities and threats that the company might face in the target market (Hill, Jones and Schilling 2014).

Figure 1: SWOT Analysis

Porters five force model includes Bargaining power the customer, Bargaining power of the supplier, Threat of new entrants, Threat of substitutes and industry and Competitive Rivalry.

• Bargaining power of the customers will be low as the business will operate online. Moreover, the company is planning to operate in low cost which will reduce the threat.
• Bargaining power of the supplier is low as there are few similar industries are operating in the market. As the business will be operating in country level, the risk can raise up to medium.
• Threat of new entrant cannot be counted in this case, as the company itself is a start-up.
• Threat of substitute and industry is low judging by the demand of country liquor in the target market.
• The e-business operating in the industry in the chosen target market is low which makes the competitive rivalry low. Moreover, the product the business offers is different from other similar business which makes it unique (Rothaermel 2015; Dobbs 2014).

PEST or political, economic, social and technological analysis is the study of the particular trends in the given market which provide detailed information about the opportunity and threats.

In the political part, a detailed analysis is done on the political matters regarding the particular industry under study. Australia has tight regulation in sale and consumption of alcohol. Every retailer, regardless of brick and wall or online seller needs permit to operate. There are various laws which are as follows (Hastings and Domegan 2013).

Liquor Act 2007, states that selling or supplying or obtaining and alcohol to the age under 18 is a criminal offence. This law is valid through New South Wales. Similar laws are prevailing through Victoria, Queensland, South Australia, West Australia, Australia Capitol Territory and Tasmania.

Economic aspect covers up the taxation, product price and other economic factors that need to be considered before opening a business. This can include income level, life schedule of the target consumers and deals available with the competitors (business.qld.gov.au 2017). Australian government imposes high tax rates, such as the Wine Equalization Tax, which inflates the overall price consumers pay. Another challenge the industry faces is the volatile price of grapes, which potentially increase cost of the production and price of wine.

Social and cultural factors include word of mouth promotion, Better use of social media platform for promotion of other product and many more. Australian population is shifting from beer consumption to more wine consumption due to changing tastes which should be considered. Other than that, a change in drinking pattern is noticed in the Australian market compounded from an increase in health awareness, which has lowered demand and consumption (Szolnoki, Thach and Kolb 2016).

Value proposition

Ii includes the technological advancement and use of the facilities by the target market. it also includes the promotional possibilities for the company in the market. Australian market is well developed in technology where every age group is familiar with. Ecommerce is also accessible from mobile phone which enlargers the possibilities of e-business. From company’s behalf, there are numerous new ways to engage and co-create with customers, such as a focus on storytelling the brand created content. It will help to overcome restrictions placed on a highly regulated industry and enable high level of promotional activity. Converging social networks with e-commerce will enable new ways of gaining a conversion from customers (Ho 2014).

The online liquor business proposed will be using the AIDA model of advertising as their marketing and advertising strategy. AIDA stands for awareness, interest, desire and action. Best medium for this model is the social media, where the company will put the important details that will grab the customers’ attention, grow their interest and desire for the product and finally make them to get into action and purchase the products offered. The important social medias that are best suited for this are facebook, twiter, instagram, youtube, linked in and many more operating in the market area. This can also generate revenue by getting more high attentions in their.

• Email marketing is most preliminary marketing and advertising strategy used by the companies, where promotional mails were sent to the potential customers. It is still a useful strategy used today and the company will be using this as a vital marketing strategy
• Mobile marketing is another important aspect. As most of the population in target market vigorously uses mobile phone, this strategy is also taken into consideration. In this aspect, the company promotes their products and services over phone by sending text messages and phone calls.
• This is a Smartphone era where almost every individual uses one. Mobile apps are vastly used by the population for different purpose from shopping to paying electric bill. Every e-business uses apps for promoting and advertising of their product. this will be an important marketing strategy for the company.
• Social Medias like facebook, twiter are important part of individual’s life. Using these for advertising will be beneficial for the company.
• Cost benefit analysis is the comparison of cost and benefits of public goods to decide if they should be undertaken. It can broadly satisfy two purpose of the company which is to determine if an investment is sound and to provide a basis for comparing projects.
• Trust and validity of the customers is the utmost priority of the company. Payment channel, timely delivery, proper description of the product and maintenance of transparency will the taken are some issues that company will be focusing to insure.
• Consumer profiling is the technique used by the company to categorize consumers for the help in advertising. As the company is targeting the middle income population for selling low price liquor, the advertising will be focusing the exclusively low price of and good quality of the product which will attract more customers.
• Transaction log allows an organization to track the details of their sales and marketing module. To keep a track on the customers and their purchases, it will come in handy for the proposed start-up (Ma et al. 2017; White et al. 2015).

Conclusion

In the report, a thorough analysis has been done on the e-business market of Australia. The proposed industry under study is online alcohol industry on which, a detailed analysis has been done. Three goals with their brief description have been set for the new start-up that was proposed on the basis of the market condition and customers demand. A clear marketing strategy has been set with the help of SWOT analysis, value proposition and other tools in hand. An external environmental scan has been done using the Porter’s Five Forces Model and PEST.  A thorough marketing and advertising strategy has been set for the proposed e-business including the aspects like mobile, apps, email, social media marketing, transaction logs, cost benefit analysis, trust and validity consumer profile and behavior models. In conclusion, it can be stated that, Australia is a rising e-business market and the opportunity there is limitless. As the number of competitors in the chosen industry is low, the growth rate can be high. The goals can be achieved if the proposed strategies are properly followed. 

References

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Bruwer, J., Bruwer, J., Roediger, B., Roediger, B., Herbst, F. and Herbst, F., 2017. Domain-specific market segmentation: a wine-related lifestyle (WRL) approach. Asia Pacific Journal of Marketing and Logistics, 29(1), pp.4-26.

business.qld.gov.au. 2017. pest. [online] Available at: https://www.business.qld.gov.au/running-business/marketing-sales/tendering/understanding-buyer/researching/pest [Accessed 26 Jul. 2017].

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