What Consumers are Buying Online

Since the first e-Commerce stores were launched in the 90s, online retail has grown by leaps and bounds. Online retail is set to continue expanding for the foreseeable future. Many bricks and mortar stores have made the leap into online retail, purchasing warehouses and shelving systems for their products. In this article, we look at what consumers are buying online, and how this is expected to change in the coming years.

What We’re Buying Online

A new report by Forrester Research and PayPal (‘The Secure Insight: Changing the Way We Pay’) has projected that the online commerce will reach $37.7 billion by 2013, up from $30.2 billion this year. It found that nearly nine million Australians already buy goods and services on the internet, and around 97 per cent of internet users had already purchased something online.

The report suggested that groceries, travel, and apparel were the major categories for online spending, and that Australians are growing increasingly comfortable with shopping online:

  • Travel. The biggest slice of the online market at $7.4 billion this year and set to reach $7.9 billion in 2013.
  • Groceries. Australians spent $5.5 billion on groceries online this year, and are expected to spend $7.3 billion in 2013.
  • Fashion. The sector with the largest growth rate, growing 20 per cent  in 2011 (to $1.7 billion) and expected to hit $1.8 billion in 2012.

The report also found that, at 73 per cent, domestic retail accounted for the majority of online purchases.

A separate report released by IbisWorld in October suggests that revenue for online retail in Australia expected to increase by 9 per cent this financial year, and will continue to grow by 7.2 per cent until 2016-17.

The report states that various factors will drive the growth, including more disposable income, higher levels of consumer confidence about online shopping, more goods on offer online, and better transactional efficiency. A further factor was that more businesses were entering the online market. Efficient warehousing and pallet racking systems are just one of the core elements of large online retail businesses.

The IbisWorld report, which had a slightly different methodology to the Forrester/PayPal report, found that Australians were purchasing the following items online (the figures refer to product categories as a percentage of total revenue):

  • Computer and electronic goods – 18.6 per cent
  • Food, groceries, and alcohol – 18 per cent
  • Software and apps – 12.1 per cent
  • Clothes, sporting equipment, and toys – 11.5 per cent
  • Published media – 7.3 per cent
  • Cosmetics, fragrances, and personal care items – 3.1 per cent
  • Jewellery and fashion accessories – 2.6 per cent

The remaining 26.8 per cent was made up of a combination of other product categories.

Mobile Commerce

Riding along with the explosion of online retail is that of smartphone-based purchases. Around 42 per cent of Australians own a smartphone. Around 34 per cent of smartphone users have purchased a product on their phone in the past six months. Commentators suggest that we’ll be seeing even more of mobile-friendly shopping sites and payment options.

Leave a reply