Online retail sales Australia to hit $25 billion by 2015

AUSTRALIA | Research has revealed key findings pertaining to the adoption of the internet as a channel for the future success of Australian retailers in 2013, based on a joint study conducted by Frost & Sullivan. Online retail sales is expected to grow with 39% to $25 billion by 2015.


Overall retail sales Australia to grow | Pressure is on for in-store Retail

The study of 219 Australian retail managers by Frost & Sullivan was carried out in July 2013 to understand the prevailing mood as they head into the peak trading period of the year and to find out what strategies they have in place to tackle the growing pressure from online competition. The study revealed that almost 50 per cent of Australian retailers believe that in-store trading conditions in 2013 are worse than the first half of 2012, while 35 per cent view conditions as better. With overall retail sales in Australia expected to continue to grow by only two per cent in 2013, smaller chains in particular are finding retail conditions particularly challenging.


Key Findings


  • Online retail sales are expected to reach more than $18 billion in 2013 and are forecast to grow 39 per cent to $25 billion by 2015 – including purchases by Australian consumers on local and overseas websites.
  • While more than 50 per cent of Australia’s 77,000 retail businesses have a website, only one-third currently accept orders online.
  • With an estimated 33-50 per cent of all online expenditure by Australian shoppers now going to overseas sites, traditional retailers in Australia need to consider adopting an omni-channel strategy that leverages all channels – social, phone, web and physical stores – to provide an engaging and rewarding brand experience to remain viable.

Retail sales expected to be further impacted

“A number of factors have impacted retail sales growth in Australia, including a greater propensity for consumers to save rather than spend, a challenging job market and rising household costs,” said Mark Dougan, managing director for Australia and New Zealand for Frost & Sullivan. “The market has also been impacted by price deflation, partially caused by the growth in online retail sales, and by a growing number of overseas retailers targeting the Australian market, offering a greater variety and choice of goods at lower costs. This is coupled with the lack of consumer foot traffic into brick and mortar stores, as well as the high operating costs retailers must absorb.”


Slower online sales growth in Australia than other comparable markets

According to Frost & Sullivan, although online sales have grown strongly in recent years, penetration in Australia is still only around seven per cent of total retail sales, which is behind comparable markets such as the UK and the USA, where online sales are now around 10 per cent of total retail sales. The largest online expenditure is on clothing, footwear and personal accessories, followed by electrical and electronic items. Despite lagging other markets, online sales in Australia are expected to grow strongly to reach ten per cent ($25 billion) by 2015.


“As Australian consumers become more confident with online shopping, and as a greater number of retailers actively promote their online offerings, the value of online retail sales is growing at double-digit rates, suggesting that Australia still has room to grow,” said Mr Dougan. “Many brick and mortar retailers are currently missing out on market opportunities from the booming online retail sector in Australia. Taking a multi-channel approach can offer them many opportunities, such as lower operating costs, the ability to reach new customer segments, the potential to broaden their product range and the ability to operate with fewer geographic limitations.”


Mobile and social: key factors to accelerate online shopping in Australia

The Frost & Sullivan study indicates that the increasing usage of mobile devices is stimulating online shopping in Australia, with 30 per cent of online shoppers using smartphones or tablets for online transactions. This ability to shop online in a greater range of locations and situations is increasing the propensity of Australian consumers to use the online channel.


About one-third of retailers also now have a social media presence, using platforms such as Facebook, Twitter and YouTube, to communicate with consumers. The total global value of social commerce is estimated at almost $15 billion in 2013, and is likely to reach $30 billion by 2015. With over two-thirds of Australians now using social media online, it is increasingly important as a way to search for products, to obtain peer recommendations on products and to communicate with retailers or other businesses. This indicates a significant opportunity for retailers to leverage another channel to interact with consumers.


“Australian retailers are recognising the opportunities that the web offers to interact with their customers in new ways, and to deepen and broaden these relationships, but making the web an integral part of the retailer’s approach involves more than just setting up a website or Facebook page,” added Mr Dougan. “There are operational challenges that need to be overcome to make the web the centrepiece of a retail organisation. Retailers’ existing business software and systems can be an impediment to implementing an omni-channel experience. Successfully providing a consistent experience through whatever channel the customer uses to engage requires an integrated IT infrastructure that can link data from all channels.”


Integrated software platform for retailers to overcome challenges and move online

According to the research, a major challenge faced by many retailers with a web presence is a lack of integration between their web front-end and back-end fulfilment systems. Only 24 per cent of Australian retailers with a web presence currently have software that integrates web orders with their inventory management system. Without a unified software solution, retailers face difficulties in maintaining a consistent brand experience in areas such as customer support, pricing and promotions, as well as increased operational costs to run and maintain each channel.


Article sourced from, by Charles Pauka, August 20th



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