How much will Australian consumers spend online this year and what impact is it having on retailers?
Online retail sales are expected to reach more than $18 billion in 2013 and skyrocket to $25 billion by 2015, according to the latest Frost & Sullivan study.
The findings include
purchases by Australian consumers on local and overseas websites.
The study, which survey 219 Australian retail
managers in July, found almost 50 per cent of Australian
retailers believe in-store trading conditions are worse in 2013 than the first half of 2012.
Only 35 per cent view conditions as better.
Frost & Sullivan Australia and New Zealand managing director Mark Dougan said smaller chains in particular are feeling the squeeze.
"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.
"The market has also been impacted by price deflation, partially caused
by the growth in online shopping 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."
According to the report, online sales still represent only seven per cent of total retail sales in Australia compared to the UK and US, where online sales are now around ten percent of
total retail sales.
Online sales in Australia are expected to grow strongly to reach ten per cent ($25 billion) by 2015.
The largest online expenditure is on clothing, footwear and personal
accessories, followed by electrical and electronic items.
"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,"
Dougan said.
"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."
Smartphones or tablets account for 30 per cent of online transactions, according to the study.
Meanwhile, the total global value of social commerce is estimated
at almost $15 billion in 2013, and likely to reach $30 billion by
2015.
Dougan said over two-thirds of Australians now engaged with social media.
"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.
"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."