The latest report released recently by the Australia Post reveals much about the direction of e-commerce, and it’s good news for online retailers.
Australia Post’s second report, Inside Australian Online Shopping, gathered from data collected between January 2015 and December 2016, confirmed what many in the industry know: Australian consumers’ expectations around convenience, value and choice are driving the population to shop online more frequently.
The Growth of Online
While many in e-commerce are finding retainment of their market share difficult, the report’s positive message is that online shopping is still experiencing growth, with online purchases up 11.5%. The reasons for growth vary but include competitive pricing, easier comparisons, variety and convenience. Strong brand loyalty, as well as an increasingly sophisticated consumer, has resulted in a 16% average increase in the number of parcels generated by each online transaction per shopper.
According to the report, growth in online retail was up 6.9% on traditional retail, but the latter brought in $261 billion compared to $18 billion in e-commerce physical goods. The highest category online is the department and variety store, which experienced 7% growth and accounted for 30% of market share, with fashion coming in a close second with 17% growth and 22% of market share. Together, they made up over half of all online purchases. Media experienced the highest level of growth at 23% (books alone made up over 80% of online purchases in the category). Health and beauty, as well as hobbies and recreational goods, were up 16% for the same period. While online purchasing behavior is positive across the industry, the overall growth is fairly modest compared to past years.
Online retailers are catching on to the power of Australian youth. One in every 10 online media sale, for example, comes from the youth segment. Research shows that baby boomers still hold the spending power, enjoying the highest disposable income of any demographic. But it’s millennials (specifically those aged 25 to 35) that make up a large proportion of the population. This is the generation that has grown up with the internet, social media and e-commerce as the norm, which means their needs, wants and expectations will shape the future of e-commerce.
Also reflected in the research is the way in which consumers are now more comfortable with previously perceived barriers to purchase. Much of this has been driven by online retailers who adapt to consumer demand. Enticing options for returns, alternate delivery preferences, increased tracking notifications and improved customer service opportunities have made consumers more confident.
The majority of online purchases come from New South Wales, Victoria or Queensland. With growth slowing across the board in 2016, the states with the highest rates of growth were New South Wales, ACT and Victoria. Growth in metropolitan areas was stronger than regional areas; however, e-commerce in extremely remote areas such as Nhulunbuy (NT) and Onslow (WA) almost doubled compared to 2015.
The research also showed what many retailers should be aware of — online shopping via mobile devices experienced a 52% increase. While the majority of online shopping continues to be completed by desktop or laptop, purchases made on those devices declined in 2016 at 10% and 6%, respectively. The majority of purchases (29%) occur later in the day (7-10pm), with another 18% of purchases made from 2-5pm.
An exciting statistic is that domestic purchases still make up the majority of online spending in Australia. At the end of last year, domestic purchases accounted for 79% of the online market, with a growth rate of 11% (compared to the 7.3% growth rate for international purchases).
It’s an exciting era for online retail, and, with the imminent arrival of Amazon and the success of marketplaces such as eBay and Catch, opportunities for Australian retailers are boundless. The statistics reflect e-commerce’s potential. The statistics reflect how Australian consumers are shopping online and what they want. Agile retailers are shifting with the times.