The recently-released report by PricewaterhouseCoopers and Frost & Sullivan estimated that online shopping expenditure in Australia in 2011 will reach $13.6 billion, up 13 per cent on last calendar year. And a staggering 44 per cent of that expenditure – $6 billion – will leak to overseas websites.

Local retailers are quick to blame, but have been slow to react. The argument that Australian merchants are unfairly burdened with a GST impost is at best peripheral. The theory that it’s all down to the Australian dollar is closer to the mark – it’s created more of an incentive for shoppers to flee our electronic shores – but really, overseas sites have been relatively cheaper for a long time.

The fact is that it’s time for retailers to stop blaming external factors, and, as Charis Palmer wrote in Technology Spectator this week “look in the mirror…face facts…(and) admit it’s their own fault they missed the online retail boat.”

Palmer points out that the e-commerce boom should have come as no surprise. For example, Forrester and Jupiter research were both forecasting online retail growth of 20 per cent a year back in 2007. So why were the signs ignored?

I believe that it was either a case of arrogance or ignorance (or perhaps a combination of the two).

On the first point, Australian retail had it good for a number of years. This week, Reserve Bank Governor Glenn Stevens called 1995 to 2005 the “good old days” of consumption growth, when households were spending more than they were earning and lavishing their disposable dollars on retail. Given that “positive comps” were par for the course, it was easy for retailers to believe that they didn’t need a serious online presence.

Secondly, there was a great deal of ignorance around online at a senior level. In my experience, many retail chiefs delegated the responsibility of creating their websites and e-commerce sites to their IT departments. Wrong move. With the IT guys in control, the result was often unnecessarily complex, far from customer-friendly, and delivered to their own timetable, not that of the business.

So while Australian retail fiddled at the edges of online, great brands and businesses were being built overseas.

Amazon is not just a great digital retailer, it is an awesome retailer fullstop. In a report published by Kantar Retail and Chain Store Age 12 months ago, Amazon was ranked the second most valuable global retail brand behind Walmart. Similarly in the UK, we saw the rise of innovative retail sites like Net-A-Porter.

When officiating at the recent Retail World Awards, my fellow judges and I were dismayed at the lack of depth of online entries. There were notable exceptions – Shoes of Prey is an innovative concept – but too many retailers were mouthing “multi-channel” but not really following through.

So what needs to happen? 

We need to catch up and we need to do it fast. 

We need to think cross-channel. 

We need to develop digital strategies that include e-commerce, websites, mobile sites and social media. 

And these strategies need to complement our physical stores. It’s a case of embrace online… or get sidelined.

* Jon Bird is CEO of specialist retail marketing agency IdeaWorks and chairman of Octomedia, Inside Retail’s parent company. Email jon.bird@ideaworks.com.au. For more retail insights and inspiration (with a dash of opinion), visit www.newretailblog.com.