Growing consumer trust driving e-commerce sales
The $17 billion that Australian consumers spent on e-commerce this year is a fraction of amount spent on retail more broadly, the 4 per cent year-on-year increase in online spending shows a growing demand, as customers begin to better understand and trust the platform.
According to new data from Nielsen, Australians spent $311 billion across the total retail industry, meaning e-commerce sales made up a little over 5 per cent of the total industry in 2018.
While the number of survey respondents who said they shop more often in-store fell from 56 per cent to 50 per cent year over year, those who said they spent more time shopping online grew from 13 per cent to 22 per cent – an almost 70 per cent increase in volume.
One of the fastest growing sectors in e-commerce according to Nielsen is the purchase and delivery of alcohol, with Beer Cartel co-founder Richard Kelsey estimating the business has grown roughly 30-40 per cent compared to the year prior.
“That volume suggests to us that there is definitely changes that are happening, there is a shift to people being happier to buy things online,” Kelsey tells IRW.
Alcohol is a difficult thing to deliver, and initially the weight and fragility of a typically glass bottle caused customers to be more cautious when purchasing online, says Kelsey.
“It’s rapidly changing, especially when customers can see that businesses like us that have a huge range, that they wouldn’t be able to get from their local bottle shop, means that by going online they’re actually accessing a much bigger range and it is something that people are seeing become more and more convenient for their lifestyle,” Kelsey says.
This increase in consumer trust is tied directly to retailers continuing investment in the channel, says Citi retail analyst Bryan Raymond, with many retailers having focussed on their online offerings ahead of Amazon’s arrival last year in an effort to stay competitive.
“Are they as good as [the offers] in the leading online retailers in the US, UK and Asia? No, but they’re definitely improved versus as a few years ago, and that drives consumer trust,” Raymond explains.
“If you look back five or ten years ago, retailers had much longer delivery times [and] there was less certainty around delivery outcomes… Now [consumers] have greater certainty that if you order your product in mid-December, that you can get it delivered before Christmas.”