Within this report we endeavour to provide a perspective on the growth of online shopping within Australia. Through industry reports, statistical data bases and journal articles the basis of why consumers choose to shop online is detected in conjunction with key deterrents of online shopping and the profile of the online consumer within Australia.The research conducted analyses consumer motives behind online purchasing, potential barriers and risks as well as Australia's online consumption profile to conclude that while online shopping has grown substantially in recent times and will continue to grow in order for retailers to maximise their profitability they must utilize both online and brick-and-mortar outlets..
The purpose of this report is to determine what factors influence a consumer's decision to buy online, rather than in stores. Online retailing has introduced a whole new aspect of shopping for consumers within Australia and the rest of the world. This new trend has “grown dramatically over the past five years, to become part of the mainstream Retail Trade Division”, (Ibis World Report, 2017).
This report explains the many reasons as to why consumers are moving towards the online retail phenomenon. Online shopping allows consumers a more convenient and time efficient way of comparing products from a range of suppliers, better price comparisons, no crowds and the ability to purchase products discretely. Important statistics relating to why consumers shop online are detailed, including the various consumer demographics, as well as the most popular times individuals tend to purchase. Key factors are established determining the main motives for online consumers and how Australia's economy is reacting to the change in purchasing. Key barriers are discussed, providing reasons as to why certain consumers are apprehensive towards shopping online and the potential risks involved.
Online shopping has taken over the Internet in the past 10 years. According to the Australian Bureau of Statistics (2016), 64% of people aged 15 years and over who accessed the Internet used it to make online purchases in 2008-2009. This is an increase of 61% from the years 2006-2007. Within 2016, Australian consumers spent an estimated “$20.1 billion over the last year purchasing goods and services online” showing a spike in media, toys and takeaway foods (NAB Online Retail Sales Index, 2016).
The Australian Bureau of Statistics (2016) divided the population by age and income to determine a pattern in online shopping. It was found that 75% of younger adults aged 25-34 were making online purchases, as opposed to only 45% of people aged 65 years and over using the internet as their source of purchasing. In regards to income, the ABS found a strong correlation between income and online purchases. According to their findings, between 2008-2009 only 54% of those with an income of less than $40,000 made online purchases, compared to 85% of those with an income of $120,000 or over.
According to the Australian Post “consumers tend to shop online later in the day, with 29% of purchases made between 7-10pm and a further 18% occur between 2-5pm” (Australian Post, 2017). These statistics show that more of the population tend to shop at home, once they are finished with their working day. This information would be useful for online retailers, as it would determine the best time of days to send out promotional emails to their customers.
Our on-demand society has created the expectation of acquiring goods from the comfort of our own homes in a time efficient manner with little required effort to browse a wide range of goods and services, compare prices and make discreet purchases from across the globe. Two vital key factors that influence online shopping are a consumers income and their internet accessibility.
An eCommerce Industry report, conducted by the Australian Post (2016) concluded that ‘growth in online spending exceeded bricks-and-mortar by 1.8%' (Australia Post, 2016 eCommerce Industry Paper). This growth is accredited to the growing number of Australians who are accessing the internet. According to the Australian Bureau of Statistics (2016) 13.5 million people are subscribed to internet, with an increase of 4.7% since the previous year. The increased use of internet access over the past year has lead to a more confident society when using the internet to purchase goods and services online.
The ease consumers have when online shopping in actively searching for information on products and comparing against other alternatives make the appeal of online shopping considerably higher than in store shopping experiences, especially for the time poor consumer. With the strength of Australia's economy at US$ 47,770 GDP per capita (OECD Data, 2016 Australia Statistical Profile) a large proportion of Australians have a higher disposable income to spend both online and in stores, resulting in most successful Australian retailers operating both brick-and-mortar and online outlets to increase sales and revenue. Other key motives that drive online shopping include convenience, cost and time, efficiency and a range of products.
“Despite the growing interest in internet retailing, many consumers still choose not to shop online” (Quester et al, 2014). With the growth of the internet consumers perceived risk is on the rise. Such risks include, performance risk, privacy risk and financial risk.
Perceived risk can have a negative effect on the attitudes towards online shopping which is a significant predictor of decision making.
The main concern behind performance risk is the product quality as well as the size and fit of the goods. Online shopping does not allow the consumer to inspect the product before they buy. If the product isn't as expected or described, it takes a longer time to return the product.
“Government and industry organisations have declared information privacy and security to be major obstacles in the development of e-commerce” (Miyazaki and Fernandez, 2001). The fear of fraudulent transactions as well as identity theft or stolen credit card details has increased over time, and while online payment security technology has come a long way, consumers may still encounter problems from time to time. There will always be a risk while online shopping, but if consumers are aware and take the appropriate precautions, they can enjoy the benefits of online shopping without anxiety.
In this report, the incentives and deterrents of consumer's attitudes towards shopping online in Australia are highlighted. Findings indicate that increase in demand for shopping in the comfort of your own home, across all demographics, is driven by convenience and time efficiency as well as the availability and the range of products. While consumption of goods and services purchased online continues to grow there are still privacy and security risk factors that concern Australian consumers when online shopping. The growth of the internet has influenced the need for marketers to adapt to online marketing techniques and forced retailers to utilize online shopping platforms to stay competitive. Theories about consumer behaviour can be used by marketers to develop cutting edge marketing strategies for ecommerce and increase online consumption for those who frequently access the internet.
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