Unpacking the online shopping boon

Published on the 16/02/2021 | Written by Heather Wright

Unpacking online shopping

Savvy retailers get second Christmas…

Last year was a record breaking year for online shopping with the forced move to online shopping resulting in lasting changes in consumer spend – and it’s a change businesses are gearing up to capitalise on long term.

Spend across both Australia and New Zealand surged online in 2020.

New Zealand Post’s annual eCommerce Spotlight shows Kiwis spent NZ$1.2 billion more online, in 2020 than in 2019, with more than 305,000 Kiwis shopping online for the first time and spend hitting NZ$5.8 billion.

Consumers are no longer seeing it as online vs instore, but a seamless experience that spans both.

Across the ditch, Australia Post’s Inside Australian Online Shopping 2020 eCommerce Industry report shows that by the end of November online shopping was up more than 45 percent – more than double the 17.5 percent increase seen the year before. Australian shoppers took advantage of November sales and shopped up large in the last two weeks of November, with sales up 54 percent. Growth remained high into mid-December though, with online purchases for the month up 34.9 percent.

For Kiwi companies, there’s additional good news, with 71 percent of all online spend in New Zealand going to domestic retailers. And while most physical retailers were closed for at least two months with lockdowns, in-store spending was still well over a billion dollars up on 2019, NZ Post says. Paymark data, meanwhile, shows spend on par with 2019.

Australia, which had seen retail spend slump to a 28-year low in 2019, saw retail spend rebound in the September 2020 quarter after a significant drop in the previous quarter, though the rebound was patchy, with some segments, including clothing, cafe and department stores, lagging.

“Early in the year, before Covid-19 started to impact us in New Zealand, [online] spending numbers were up about 12-15 percent in the first few months,” says Chris Wong, NZ Post general manager of business marketing. “Then Covid-19 hit and this changed the shopping landscape in a major way, especially during lockdown when physical stores were inaccessible to most.”

It was a similar story in Australia, where Easter weekend became the biggest online shopping weekend in history, followed by August becoming the busiest online shopping month in history.

And in both markets, new customers were embracing online and not just during lockdowns. The NZ Post report shows around 67,000 new customers moved online in Q4 (at a time when New Zealand was largely out of lockdown). Those new customers averaged 1.4 transactions each in Q4 racking up $136 per person, while existing customers shopped more often, at 3.3 time on average, but spent less ($110).

The online trend is hitting home for SMEs too, with a Mastercard survey last month showing 61 percent of Australian SMEs expect revenue to increase from online sales, with more than half (54 percent) forecasting an increase of at least 10 percent from online sales specifically.

The report says the majority of SMEs are now putting a strong focus on online tools, including using social media marketing (65 percent) making their website easier for customers to use (61 percent), social media sales (55 percent) and improving customer payment methods online (54 percent).

The year ahead
At the Australian eCommerce Summit last October, National Online Retailers Association of Australia founder Paul Greenberg noted that many retail CEOs are still ‘overthinking’ the distinction between online and in-store sales.

“A sale is a sale, and meeting the customer where they want to be met is clearly the ballgame,” Greenberg said.

Wong agrees, saying consumers are no longer seeing it as online vs instore, but a seamless experience that spans both.

“Cross channel retailers need to consider how to create more personal and human experiences that add value for shoppers however they engage,” he says. He points to examples of personalisation and virtual applications, like augmented reality, to help replicate the in-store experience at home. In other situations, the ease and convenience of the online purchase process is offered to customers in an in-store setting.

While he says 2021 will see more businesses adapting to a more competitive online world, with ‘online first thinking’ increasing among businesses he also sounds a note of caution, saying existing online retailers will continue to invest in online promotions to drive sales, pushing the cost of digital advertising up, with the growth of social commerce, facilitated by big players like Facebook and Shopify will lift competition for online attention and sales to new levels.

“The online world will become even more competitive, requiring businesses to work even harder to develop their brand and to ensure their advertising spend cuts through the clutter,” he says.

Retailers will also be stepping up their game on the fulfilment side.

“Now more than ever, it’s important to give customers choice and control on how, when and where they receive their parcels.  This will see options like Click and Collect and Out of Home collection (like collection agents and lockers) solutions accelerate across many retail sectors.”

There will also be increased focus on retention of customers, Wong says, with companies keen to retain and grow their new customers on the back of the bumper 2020 year.

“The challenge for retailers is to think differently about who their customers are and what’s important to them.” These new, first time, online shoppers, may be older, live rural and have different preferences, behaviours and needs and retailers can’t assume that they are similar to the customers they had before.

“Engage with your customers, understand what’s important to them and keep adapting your offering as their needs and expectations change,” Wong says.

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