Key Trends in the Australian & New Zealand Online Shopping Market

Phil Harpur

Senior Research Manager

Digital Media, Australia

29th August 2011

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Australians & New Zealanders Embrace Online Shopping

• Strong uptake in online shopping during last 12 months

• Purchasing on overseas sites driving growth especially in Australia

• Heightened market awareness & growing consumer acceptance.

• Development and expansion of new channels: brands selling direct to consumer, Social Commerce, Mobile

Commerce, Group Buying

• Online & offline experiences are merging.

• Consumers want to shop across all channels ‘anytime, anywhere, & on any device’.

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The Most Comprehensive ANZ eCommerce Study to Date

METHODOLOGY• Survey of 1,200 consumers (1,000 in Aus & 200 in NZ), 15 to 65

years old who had shopped online in past 12 months

• 30 interviews with retailers (both online-only & traditional bricks-and-mortar) & other industry observers

• Comprehensive review of secondary data sources.

ONLINE SHOPPING DEFINITION• Online purchasing of physical merchandise such as clothes,

books, & electronic items

• Excludes services such as travel & accommodation, financial services products & media downloads

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Market Outlook and Forecast

• Online shopping expenditure in Aus to reach $13.6 billion, a growth of 13% from the $12 billion expenditure in 2010.

• In 2011 NZ market to reach NZ$2.60 billion, an increase of 12%

• Almost 90% of online shoppers in Aus will increase or maintain their online spending over the next 12 months.

• Aus market predicted to grow to $21.7 billion by 2015, CAGR of 12.5% (7.2% of retail sales)

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Australians embrace Shopping on Overseas Sites

• Approx 44% of online expenditure in Aus is on overseas websites, up from 40% in 2010

• Overseas retailers - increasingly targeting ANZ market

• Weakness of US dollar has made purchasing on overseas sites more attractive

• Local retail chains facing increased competition from growing number of Online Retailers both locally & internationally• Often seen as cheaper / offering greater variety

• Technology improvements providing greater price transparency

• Retailers in certain retail sectors more vulnerable as offshore Online Retailing grows.

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Main Reason for Purchasing From Overseas Websites

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Australians embrace shopping via mobile devices

• Shopping via mobile devices (smartphones / Tablet PCs) becoming increasingly popular: another channel for consumers to shop tool to assist in overall shopping process

• Immediacy aspect - available anywhere & anytime

• More opportunities to engage shoppers when & where they’re making buying decisions

• Location Based Services e.g. Facebook places used to geo-locate customers & send offers as they pass a store

• Price Comparison via Barcode Scanning Rapid adoption in US and Europe

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Social Commerce is expanding rapidly

• social commerce - usage of social media tools to facilitate commerce

• Social Media strategy used minimal marketing budget to: help deliver fast & efficient customer service enable easy running of cost-effective promotions drive interaction between consumers

• Social Media tools now adopted by most Online Retailers in ANZ.

• SME retailers in particular finding success – levelling the playing field Shoes of Prey

customer emailed photo of shoes when shipped Product design ideas comes directly from customers

AussieBum YouTube - one of its key promotional tools

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Frost & Sullivan 2011 Australian Digital Media Program

• 1) The Australian Online Classifieds Market

• 2) The Australian & New Zealand Online Shopping Market

• 3) The Australian Online Video Market

• 4) The Australian Online General and Mobile Advertising Market

• 5) The Australian Online Search and Directories Market

• 6) Australian Online Advertising Market – Year End Overview and Outlook

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Contact

Donna JeremiahCorporate Communications Asia Pacific+603-6204-5832djeremiah@frost.com

Phil HarpurSenior Research Manager, Digital MediaAsia Pacific +61 (0)2 8247 8900apacfrost@frost.com

Carrie LowCorporate CommunicationsAsia Pacific+603-6204-5910carrie.low@frost.com