Online shoppers are spending more but becoming more choosy: Report

Online shoppers are spending more but becoming more choosy: Report


Small online retailers tend to sell more over the internet than larger businesses proportionate to their size, while web retail customers are opting for more expensive, higher quality purchases, a report has found.

The Commonwealth Bank’s inaugural CommBank Retail Insights report surveyed 500 retailers and analysed $3 billion worth of transaction data on online purchases made using Commonwealth Bank customer credit cards across 10 major online retail categories.

The report found the average online transaction value is up by 14% year-on-year, while 90% of shoppers were found to be buying things from three or fewer brands online each quarter.

The retailers that participated in the survey reported overall online sales are forecast to grow by 20% in the next year, with 37% of the retailers forecasting better conditions for the year ahead.

Just under half of the retailers said they are planning to increase their technology budgets and around 36% said they believe their business is effective at acting on the insights they gain from collecting data about their customers.

Jerry Macey, Commonwealth Bank national manager for the retail industry, told SmartCompany this morning small businesses should take note of the findings about business confidence and technology.

He says while many retailers feel “very positive” when asked them how they felt about business confidence in the coming year, this differs when it came to size, with those turning over less than $1 million a year less confident.

“The report found more of them thought it (business confidence) is going to decline than bigger companies,” he says.

But Macey says confidence is generally translating into greater online technology spend by retailers.

“We noticed that 43% are looking to increase their technology spend over the next year, and the things they tend to spend on are social media and loyalty programs,” he says.

Macey says the report also looked at online sales and the proportion made by companies in different turnover brackets.

“It’s interesting, the number of sales made online increases as companies move towards the SME level,” he says.

“Small businesses tend to be selling more online than larger ones; they also tend to have online teams and instore teams working together.”

The report also found almost three quarters of retailers consider using big data as being critical to their success in future.

“It doesn’t differ too much on size,” Mercer says.

But asked how effective the retailers thought they are at exploiting big data in terms of more targeted campaigns, the smaller retailers underestimated themselves.

“[The survey] found smaller companies, although they sell more online, consider themselves to be less effective at collecting data,” Mercer says.

Mercer says the report also shows “this year is the year retailers expect mobile to take off”.

“The report found at the moment only 9% [of retailers] had more than 50% of sales coming through mobile, but expected that to be 32% in the next year,” he says.

The falling dollar is also of interest to retailers, with 70% of those surveyed saying their business is affected by the falling dollar in terms of suppliers charging more.

“For smaller business, it found there were more likely to be impacted by suppliers charging more and more likely to pass it on to their customers,” Mercer says.

National Online Retailers Association chief executive Paul Greenberg told SmartCompany the report contains lessons for Australian retailers, especially those keen to “move a bit up the value chain”, including a trend towards quality when it comes to online purchases.

“I definitely see luxury brands as being key,” he says.

“People pay more to get more. On the flipside I see those in the industry like discount variety retailers and department stores not doing so well in the current climate.”

Greenberg says an important point to note with such research, however, is that many retailers are not pure-play online retailers and it is worth querying whether they should be called online retailers.

“The growth of online retail is to be celebrated but I would caution that many beneficiaries are multi-touch retailers,” he says.

But Greenberg says the findings about growth and mobile are “good news”.

“Growth and mobile continues to take everyone by surprise, it’s changing the rhythm of retail completely,” Greenberg says.


Notify of
Inline Feedbacks
View all comments