Online shopping to hit $10 billion

As online stores move to becoming a normal retail method
Photo: Bigstock

New IBISWorld data predicts 9.1 per cent growth in online spending by Australians this year.

That’s about half a per cent higher than last year’s growth and will see the nation’s total online spend reach $10 billion.

IBISWorld industry analyst Naren Sivasailam says demand over the last five years has been driven by growth in disposable incomes, greater consumer confidence about shopping online, an increase in the range of goods on offer, better efficiency across the transaction process and an explosion in the number of online retailers.

As online retail moves to become a normal retail method, growth will slow marginally, he predicts.

“Over the five years through 2016-17, industry revenue is expected to increase. Industry players are expected to place greater focus on their marketing techniques in a bid to differentiate themselves from the growing number of competitors,” said Sivasailam.

“Online shopping has evolved into a secure, efficient and viable method of shopping for time-poor and tech-savvy consumers.”

Australia’s online retail industry accounts for 33,085 businesses and collectively employs 42,635, according to IBISWorld’s figures, which reflect the massive number of small players in the sector.

Sivasailam expects continuing growth in disposable incomes of Australians which, with the high IT literacy of the Australian population, will bode well for online retailers.

IBISWorld also predicts consolidation of players in the online sector.

“A multitude of new operators have flooded the industry over the past five years, all vying for a share of the online market,” the research house said.

“The resulting growth in enterprises has led to a rapid expansion in the range products and services offered online.

“Concentration is set to strengthen over the five years through 2016-17. This will occur as operators become better equipped in their supply of goods and consumers overcome fears associated with purchasing something without physically touching or seeing it and credit card safety.

“To this end, the industry is poised to experience further mergers and acquisitions as a growing number of businesses recognise the growth potential of online enterprises.

More on IBISWorld’s Online Shopping report, which the research house is selling, can be found online.

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