What are Australian online retailers doing right? What are they doing wrong? And, how does the local market compare to the rest of the APAC region? We find out.
Unless you’ve been living under a rock, you’ve probably heard reports of how Australia’s e-commerce market is booming. In fact, the industry as a whole is growing so well, it’s expected to exceed $300 billion in retail sales by the end of 2018. According to Rakuten Marketing, this puts the local market in good stead against its APAC counterparts.
However, despite steady growth, Australia is far from being APAC’s top dog. Both China and South Korea are set to bring in more e-commerce revenue than Aussie e-tailers in the coming months, and a number of other markets in the region are seeing a rise in e-commerce growth as well.
The State of Australia’s E-Commerce Market
Rakuten Marketing’s Senior Manager of Marketing, Asia-Pacific, Rhiannon Farrar, says the state of the Australian industry is hardly a reason for concern, as Australia is performing well in a number of areas. But, there’s always room for improvement.
“We’re seeing great success through engaging social media as a means of marketing and advertising products to encourage purchases from consumers,” she says. “Social media discovery is one of the best ways to compel Aussies to purchase, with 85 percent stating they purchased from a site after learning about it on social media.”
Despite strong social media performance, Farrar does highlight that Aussie e-tailers need to pick up the slack when it comes to shipping, as consumers want fast delivery, minus the price tag – a service that’s proving difficult to supply for many within the industry.
“Retailers need to look at their online shopping delivery options in Australia, with over a third of Australians quoting high shipping costs as the main barrier to online shopping,” she says.
“A fifth of Australians are also concerned about the lack of payment security, highlighting that more needs to happen to reassure Aussie consumers that everything is being done to protect them.”
Farrar also says that there’s extra potential for the luxury goods sector to tap into the online market, as more Australians are purchasing these goods internationally, than any other product category.
“We’re seeing 70 percent of luxury goods being purchased outside of Australia, showcasing an opportunity for the local luxury sector to prosper.”
The Market to Beat: How APAC is Doing in Comparison
Looking outside of Australia, the APAC region is also having varying levels of success in the e-commerce sphere, but the adoption rate of online shopping is growing at a faster pace in Asia than it is down under.
For instance, according to Rakuten Marketing’s latest research report: The State of E-Commerce in Asia-Pacific, Chinese consumers are adapting to mobile shopping faster than Australians.
“Our research found that 92 percent of Chinese consumers are shopping via mobile, compared to only 36 percent of Australians. The use of ‘super-apps’ in China, such as WeChat is an example of an extremely successful mobile platform which retailers [in China] are able to leverage,” she says.
Apps like WeChat aren’t just making waves locally either, as Farrar says that customers use these apps both internationally and locally as a safe way of engaging with brands in a safe and secure manner.
“Aussie retailers should be examining their mobile strategy, starting with ensuring sites are optimised for mobile and exploring partners that can further heighten the mobile experience for consumers.”
Interestingly, countries within APAC are also experiencing some of the same e-commerce hurdles as brands a little closer to home, with consumers in Hong Kong also citing payment security as a big barrier for them when it comes to online shopping.
“Over a fifth of Hong Kong shoppers are concerned with a lack of payment security when shopping online, while 18 percent of Malaysians cite concerns about the legitimacy of online shopping,” Farrar says.
“Like Australia, other APAC markets are struggling with online security, which is something that should be prioritised to ensure it doesn’t hinder further growth of e-commerce.”
Looking to the Future: Tips for Propelling Your Online Business
According to Farrar and Rakuten Marketing’s research, Aussies love to shop local, which means the opportunity is there for online retailers to successfully tap into an enthusiastic market.
“Our research shows that 51 percent of Australians believe local retailers offer a better product selection and 58 percent are more innovative than their international competitors. So there are a lot of retailers getting it right,” she says.
“To further grow their online presence, retailers need to pay close attention to how consumers are shopping and capitalise on strategies that encourage consumers to convert, such as social media and the use of coupon deal sites.”
It’s also important for local retailers to address consumer concerns in regards to shipping.
“Let’s not forget that high shipping costs and returns were among the largest barriers to online shopping identified by consumers in Australia. Retailers should be looking to employ strategies that minimise the need for returns and optimise promotions that offer discounted or complimentary shipping.”
Other avenues worth pursuing for local retailers are mobile commerce and advancements in retail tech.
“When Australians shop online, just over a third use a mobile device. However, this relatively small engagement in mobile shopping is still allowing m-commerce to grow year on year through to 2021, where m-commerce sales are predicted to hit just under $13 billion.
“In comparison, 92 percent of China-based consumers use a mobile app or browser to purchase goods, and China is projected to exceed $2 trillion in m-commerce sales alone by 2020. This suggests that there is definitely room for the Australian m-commerce market to grow.”
Chinese consumers are also proving to be more open to overcoming technological barriers presented by online shopping, with Farrar citing their openness to use third-party services to offset the cost of shipping as a big advantage Chinese e-tailers have over Australian businesses.
“Chinese consumers are savvy and will utilise cashback sites to offset the cost of shipping or freight forwarding services. Similarly, WeChat provides payment options, without which many Chinese consumers wouldn’t be able to purchase. Given the barriers to online shopping consumers in Australia have identified, retailers should be looking to first employ strategies that negate these barriers,” she says.
According to Rakuten Marketing, and a number of commentators within the local Australian industry, the border between offline and online commerce will continue to blur as the local e-commerce industry evolves.
“To future-proof their strategies and ensure continued growth, it will be important for retailers to fuse the two together in order to facilitate a seamless consumer experience,” Farrar says.