Australians’ love affair with online stores
by Keris Lahiff
It’s no news to tech-savvy consumers, but new research indicates more Australians are shopping online than ever before. In 2011, online shopping increased to $13.6 billion, up more than 13 per cent since 2010, according to data collated by Pricewaterhouse Coopers (PwC) and Frost & Sullivan.
Bad news for local retailers though – 44 per cent, or an approximate $6 billion, of online sales are made in offshore online retailers. Sales to overseas online retailers has increased a whopping 25 per cent since last year.
“Online shopping, both locally and offshore, is expected to grow at least twice as fast as compared to the total retail market in Australia over the next four years,” says Phil Harpur, Frost & Sullivan’s senior research manager. “Online spending by Australians will reach $21.7 billion by 2015, representing a compound annual growth rate of 12.6 per cent.”
The figures suggest Australia’s retail landscape is experiencing a great shift as more and more consumers increase expenditure online, says PwC’s global retail and consumer advisory leader Stuart Harker.
“Large and small retailers alike are facing stronger than ever competition from digital channels, both here and overseas. Lower prices, convenience, greater product range and a growth in mobile devices are all factors fuelling online shopping,” says Harker.
The first three factors in increasing online shopping have been known for some time, but the explosion in the prevalence of mobile technology recently has contributed to the last. In fact, more than one-third of those surveyed said they used a smartphone or tablet device to make online purchases.
“The tablet device has been one of the key drivers of online retail sales in the last 12 months and will continue to drive sales in the next year as new products are introduced into the market,” says Harker.
A real retail threat
The figures, coupled with consumer conservatism, is creating a difficult environment for local retailers.
“Australians will each spend more than an estimated $600 online in 2011, compared to $536 in 2010,” Harker continues. “The fact Australians can securely purchase a product from halfway across the world, and have it delivered to their doorstep quickly and for a very competitive price, highlights the challenges that overseas online shopping present to local retailers – traditional and online alike.”
While the threat of online stores overseas presents Australian retailers with a number of challenges, it can also be seen as an opportunity to lead the charge in offering products and services online, says PwC national digital leader John Riccio.
“The attraction of lower prices, convenience and broader product ranges is swelling the ranks of Australian consumers choosing to shop online both locally and on international websites,” says Riccio. “Australian retailers are now competing on the global stage and need to embrace the fundamental shift in underlying business models caused by the digital revolution.
According to the research, 95 per cent of consumers use the internet for product information, price comparisons and peer reviews before making their online purchases. More than 65 per cent of in-store purchases are initiated on the web. The data shows an important shift in the role of the physical store experience and how it relates to brand presence online.
“Engaging and retaining customers in the digital era requires a rethink of the role of the store and importantly how retailers engage with their current and target customers,” says Riccio. “Because customers can buy anything they want any time on any device, the store becomes more about brand and customer engagement, merchandise and the overall store experience.
“Retailers that are able to engage customers through multiple channels will build a deeper relationship than through a single traditional store channel,” he adds.
Published on: Thursday, August 04, 2011