Online Shopping in Australia
Industry Report
Online Shopping in Australia
Online retailers are forecast to increasingly expand into other sales channels over the next five years.
OVERVIEW
Online retailing has flourished due to changing consumer attitudes over the past five years. Declining discretionary incomes has resulted in consumers fostering a bargain hunting trend, increasing the demand for online shopping.
Improvements and increases in internet connectivity has helped drive industry growth. Online retailers have attracted greater demand as consumers have become more tech savvy and computer literate. Improvements in the security and reliability of online payment systems have changed perceptions of ecommerce, transforming it into a credible shopping medium.
Online retailers allow consumers to search, compare and evaluate options from a variety of providers. Trust, reputation, warranties and add-on services increasingly influence consumers. Furthermore, offering a high standard of customer service on shopping websites is a key issue for the industry. Consumers are demanding greater transparency regarding delivery charges and enhanced information about products.
Industry operators face intense competition from traditional bricks-and-mortar retailers, department stores and international online operators.
Consumers can only undertake online shopping through devices connected to the internet, which means that digital technology is an essential aspect of the industry. The rapidly increasing use of smartphones and tablets has prompted the development of mobile-optimised websites and applications. Mobile commerce enables retailers to connect and interact with customers through social media, messaging and marketplace platforms.
OUTLOOK 2020 - 2025
Consumers seeking convenience and competitive prices are expected to drive demand for online goods and services. Industry firms are anticipated to reach broader audiences due to faster broadband speeds, rising internet penetration and increased transaction security.
The industry is projected to benefit from further technological change. Operators are anticipated to use advancements in computer programs and website design to allow consumers to virtually try on clothing, footwear and accessories. These advancements may include using cameras to take precise body measurements.
New payment platforms such as Afterpay have gained significant momentum and are forecast to continue driving sales. These new payment platforms have gained popularity among younger consumers.
Online retailers are anticipated to increasingly expand into other sales channels. Pure-play online retailers are increasingly using multiple channels to engage and connect with customers, and some are opening flagship bricks-and-mortar stores that typically act as showrooms for their products. Hybrid retail models are projected to grow in popularity, increasingly blurring the line between traditional and online retail.
Industry players are expected to continue facing external competition from department stores, traditional retailers and foreign websites.
Industry profit margins are forecast to rise as operators focus on reducing overhead costs, improving supply chain processes and inventory management, and upgrading warehouse and fulfilment distribution.
Online retailers are likely to increase their operational efficiency as they become more established in their respective markets. The nature of online retail typically allows firms to boost sales volumes as online traffic increases, without an equivalent increase in staff. However, the industry is projected to rely on highly skilled labour to retain market share in an increasingly competitive environment, increasing wage costs over the next five years.
Online enterprise numbers are projected to grow slightly over the next five years as companies increase their online operations and bricks-and-mortar retailers develop online platforms. However, firms are likely to increasingly outsource their IT operations, limiting growth in employment over the period.
Source: IBIS World | Online Shopping in Australia, May 2020
Note: The industry does not include the sale of goods or services by agents that do not take ownership of the goods and services, or the sale of goods by individuals.
