Next Tuesday, November 15th is Click Frenzy 2016, Australia’s version of Cyber Monday, described as “the sale that stops a nation.” The event, which began in 2012, last year broke $200 million in sales, with Click Frenzy’s website receiving more than 1 million visitors on the third Tuesday of the month.
Click Frenzy is one of several initiatives to boost the adoption of e-commerce in Australia, which some describe as “behind the curve.” Australian consumers, however, are the most likely population in the world to shop from overseas. Being geographically distant from other major centers of commerce, Australian consumers rely on cross-border merchants to supply the latest products. Case in point is Amazon’s announced intention to launch their Australian arm by September 2017. Now may be the right time to consider expanding your e-commerce operations to the land down under.
Unless otherwise noted, figures in this article are sourced from:
Aside from China, Australia is the country with the largest population in Asia Pacific, boasting over 24 million people. The relatively young, urban, and connected people of Australia are well-accustomed to mobile devices and m-commerce, with a mobile penetration rate of 136%; more than half of mobile users taking part in m-commerce. Mobile e-commerce sales make up more than 16% of the total market.
As more than 90% of the population has access to the internet, 30% of Australian consumers spend more time shopping online than they do in stores and two-thirds of them buy from overseas. In terms of value, a Price Waterhouse Coopers report claims that e-commerce spending in 2016 will amount to roughly $4,500 per person; this is the highest in Asia Pacific and a significant increase from 2013 when Australian consumers spent an average of $2,802 each.
85% of Australians use payment cards, with Visa alone accounting for 45% of the total payments market. E-wallets are also a popular tool among Australian consumers, particularly in cross-border e-commerce.
Drivers and Barriers
Driver: Social Media
Just about every Australian under the age of 50 surfs the web using their mobile phone, and the more mobile the consumer base, the more likely they are to be influenced by social media. According to the Australian marketing firm Sensis, 20% of consumers use social media to research products and 58% of them go on to purchase the product researched; this enables small brands entering the market to achieve commercial success by leveraging social media.
Barrier: Brand Loyalty
Despite a relatively open marketplace, 90% of Australian consumers make purchases from no more than three brands in any given quarter, according to the CommBank Retail Insights 2015 report. This means that expanding into the Australian e-commerce market may be challenging in the early days as brands need to focus on increasing consumer confidence and trust. But businesses that hold up will reap rewards in the long run as loyal customers will support their preferred brands.
Driver: Forgiving Delivery Expectations
Being relatively isolated, Australian consumers have very lax delivery expectations. While it’s rare in other countries for consumers to be tolerant of delivery times longer than a week—many expect delivery within two days–in Australia, the majority of consumers expect products ordered online to take more than a week to arrive at their door. Additionally, the returns rate in Australia is very low at 3%, which is half the global average.
Australians are forgiving of long delivery times because it’s expensive to ship to Australia. In addition to oceans separating the country from the rest of the world, the urban centers within the country are separated by much larger distances than in most other countries. Even with a distribution center in Australia, shipping products can be a long and costly endeavor. Consumers are typically forgiving of these costs as well; free shipping is all but non-existent in the Australian e-commerce market.
Australian E-Commerce Facts
- The world’s most likely online consumer to buy from overseas.
- Cross-border e-commerce has grown by at least 16.4% per year since 2013.
- 36% of consumers expect cross-border shipments to take at least two weeks.
- The third Tuesday in November, Click Frenzy, is the country’s largest online shopping day.
- In 2015, 35% of all e-commerce transactions were made via mobile devices.
- The five most popular m-commerce product categories are games and apps (54%), fashion (49%), digital entertainment products (44%), entertainment tickets (43%) and travel (41%).
Recall that Australia, the second largest consumer population in Asia Pacific, is remarkable in the region because of its world-leading level of cross-border e-commerce. 80% of consumers made an online purchase in 2015, placing Australia in the top five highest e-commerce penetration levels globally. Given the rapidly growing population of urban consumers under the age of 30 making frequent, high-value online purchases, now is the time for retailers to offer their products to the Australian market.
Expanding into a new international market is a risky venture but can be very rewarding if done right. For the latest information about how you can build and maintain a strong e-commerce enterprise and keep it compatible with legislation and buying habits at home and abroad, subscribe to the Payza Blog; while you’re at it, consider following us on Facebook and Twitter for the latest industry news.