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The great online shopping debate: How the locals can win

feature-shopping-200Australians are among the most enthusiastic online shoppers in the world.

Our most recent survey, published in the CCi Digital Futures report, The Internet in Australia 2012, has found a quarter of Australian internet users make weekly purchases online, compared to 18% in the UK and only 12% in New Zealand.

And it is rapidly growing. Surveys we have conducted in 2007, 2009 and 2011 showed growth in all commercial activities we asked about. (Although, interestingly for the debate in Australia, we saw stronger growth between 2007 and 2009 than for 2009 to 2011.)

And while activity is growing among those who are online, the online Australian population is also continuing to grow.

In 2007, 73% of Australians used the internet; by 2009 this figure had grown to 81%, and it grew again to 87% in 2011. There are more Australians online, buying more often.

But amidst these figures, reporting has concentrated on flat “official” retail figures, high profile retail collapses and the “threat” of online retail.

Poor pre-Christmas sales in 2010 prompted big retailers including Harvey Norman and Myer to press the Federal Government to apply GST to goods bought online worth less than $1000.

But this reaction gave the impression they had only just heard of the internet.

While perfectly justified, their complaint that the GST-free threshold on goods bought by Australians from overseas sites made for an uneven playing field, was a little beside the point.

Australians were not going online just to save 10%. A public campaign to increase the costs of goods bought online was never going to strike a popular chord.

So why have Australia’s large bricks and mortar retailers been slow to respond to the challenge of the internet? If the conventional rule is “once bitten, twice shy”, the response to the tech-wreck of the early 2000s suggests that for Australian retailers, the multiplier is greater than the customary two. Cheaper prices and greater variety has led Australians to purchase overseas.

Australian retailers are not the only, or even the greatest, villains in the story. The high Australian dollar, the popularity of overseas travel, and the emergence of transnational online stores like iTunes, has highlighted how Australia is priced differently by many overseas firms.

Australia is seen by many as a “high-margin market”, which seems to be code for “a land of sweeping returns”. The number of parallel importing cases before the courts is an interesting by-product of this dynamic.

Yet news is far from gloomy for Australian retailers. Australians are keen to shop with Australian websites. Around half of Australian consumers who shop online make most or all of their purchases with Australian sites.

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