The State of Australian eCommerce

by Nathan Rothfield

Any forecast of consumer spending for 2020 was thrown out the window when COVID-19 reared its ugly head. With the imperative need for social distancing, self-isolation and the closure of bricks and mortar retail outlets, eCommerce platforms essentially became the only way to shop.

One clear element that we have discovered in 2020 is the need for businesses to have an online presence. Cross-functional to account for various devices, a companies online storefront has never been as vital as it is now. Responsive design and a solid digital marketing strategy are the primary ways that a business can remain pandemic bullet-proof while also reaching a swathe of new customers.

With more people shopping online than ever before, the national average has more than doubled that of 2019 to hit 41% according to figures from Australia Post. Let’s take a little dive into the current state of e-Commerce in Australia as we near the end of one of the most turbulent years on record.

The pandemic’s disruption

Global supply chains took a massive hit as a result of COVID-19 which put pressure on retailers who saw significant drops in volumes of accessible stock. 2020 has become an extreme blip on the radar which we are as yet unsure of how useful its insights will be. It is an undeniable fact that businesses need to deal with a changing landscape, but strategic planning is difficult as we do not yet know what our “new normal” looks like.

2020 has seen significant online retail growth since the COVID-19 pandemic was declared by the WHO. If we compare the figures for e-Commerce sales in Australia from 2019 to just one sole month post-lockdown of April 2020, we see a near five times jump into overdrive.

It is anticipated that by the end of 2020, online spending will sit at a 15% share of the total retail market. More than 200,000 new shoppers entered the online market for the first time, with the purchase frequency of seasoned shoppers doubling in April 2020.

What are people buying?

The initial spend was on essential items such as groceries, pharmaceuticals, and hygiene, but as Australians settled in we saw a rise in entertainment, self-improvement, DIY, and fashion. In mid-March, consumer demand for wine and liquor hit over 160% YOY.

The Australian hot spots

We see figures in Victoria sit at the highest in the country, which makes sense as this was the state that experienced the longest lockdown. Metro areas, such as Perth, East Perth, and Adelaide saw some huge rises as did inner regional areas such as Point Lonsdale and Cowes.

The biggest e-Commerce jump of the year was during the Easter period, with growth of over 55% YOY.

The ease of online shopping

As we realised the levels of convenience that online shopping provides, we also learnt more about the channels through which it is accessed. Once again, ease-of-use is key with people able to shop from a range of devices, be it phones, tablets, laptops and desktops.

Web-based browsing via a smartphone was the significant winner in 2020, beating app-based shopping and desktop access by over $3 Billion. For businesses, this signals the vital importance of having a mobile-friendly website more so than a dedicated app. Responsive design may be more critical now than ever before with the public clearly indicating their shopping preference.

Concerns for international shoppers

While e-Commerce opens up your marketplace to the whole world, there were some crucial concerns for global online shoppers with sustainable packaging and delivery, returns policies and sipping or taxes coming in as the top three. Consumers are more conscious than ever before of their social and environmental impact, ensuring the businesses they buy from share the same values. A mere 56% of all Australian packaging waste is recycled with most materials ending up in landfill.

A significant 86% of shoppers state that an easy returns policy is essential despite the interesting fact that the number of returns did not drastically increase during the pandemic when compared to previous years even though purchasing volumes have increased. Return rates were highest in Asian markets, followed by the United States, Germany and the United Kingdom.

Finally, there is a perception that shopping online means prices will be lower, thus evened out or comparable with physical retail shopping when additional costs like shipping and taxes are added into the mix. This means the consumer breaks even (in their mind). The scale tip negatively however, when those extra charges make the experience of online shopping more expensive. For this reason, checkout abandonment levels currently sit at 53% when the extra costs are considered too high (usually the point where shipping is calculated).

The countries with the highest custom fees for international shopping are Iceland, India and China (52%). Businesses should seek to provide clarity to their customers at the checkout with more stringent reviews of their shipping prices to give international shoppers more confidence.

Moving forward

While we start to see a return to normal with some locations re-opening, convenience and flexibility are still very important. Along with online purchases and delivery, Click and Collect was another service that saw a huge boost in 2020 that many assume will remain higher than usual as people realise how convenient it can be.

The number of Click and Collect between July 2019 and March 2020 when compared to April 2020 saw a rise of 30.3%. The same can be said about shopping online as a whole. Many regional communities that had very low e-Commerce figures were forced into the use of online shopping channels during the pandemic. We are yet to see if the convenience of the platform has a lasting impression on these communities, but many safely assume that it will.

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