Aussie consumers demand discounts
26 Nov 2020
Despite COVID-19 forcing many Australians to tighten their belts, their appetite for discounts remains strong.
Long queues and bustling crowds at shopping centres used to be a familiar sight during busy sales periods. But with the explosion of eCommerce, and the number of consumers shopping online increasing due to restrictions, the expectation for online sales is rising. And consumers no longer want to wait for big sales moments.
 
The PayPal 2020 eCommerce Index reveals Australia is a nation of bargain hunters with more than half of consumers1 (54%) admitting they always look for sales or discount codes when shopping online. This behaviour is even more common among younger generations (Gen Z and Gen Y both 64%).
 
PayPal’s Australian Senior Director, Peter Cowan said: “Many enterprises have already established sales and promotional strategies. But in the context of COVID-19 it will be important to offer discounts outside of traditional sales periods in order to attract new customers and drive sales throughout the year.”
 
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Consumer spending is down but demand for discounts is up

More than a quarter of Australians (28%) said they only shop when items are on sale or there is a discount code. This is a significant increase compared to 2019 when just one-in-six consumers (16%)2 said they only shop when items are on sale, indicating the financial impact of COVID-19 has fuelled greater demand for discounts.
 
Over a third of Australians (37%) said their income has decreased due to COVID-19 by an average of 25%. A further two-in-three consumers (65%) are concerned about their current household cashflow and over half (54%) have cut their level of spending during COVID-19.
 
As a result of having to tighten their belts, many Australians are becoming savvy sales shoppers and more than a quarter (28%) expect more sales and discounts will be on offer as a result of COVID-19. Older Australians over 68 years old are the most likely to expect more sales and discounts (33%).
 
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Mr Cowan said: “Despite many Australians feeling the financial impacts of the COVID-19 pandemic, there is still an appetite to shop. Just as long as they can get a good bargain. While offering sales can put additional pressure on short-term cashflow, our research shows that they will drive greater sales volumes, attract new customers and support recovery from the pandemic in the long-term.”
 

Online discounts convert sales

In 2019, the average shopper bought 2.7 impulse items and spent $108 on unplanned purchases within 3 months because they saw the items on sale3. This trend of impulse purchasing has continued into 2020 with a quarter of Australians (23%) admitting to making a sales-driven impulse purchase, with Gen Y (31%), Gen Z (38%) and individuals earning >$250K (37%) being the biggest impulse spenders.
 
Meanwhile, one-in-five consumers (19%) have added something to their cart but waited for a voucher before completing the purchase. Again, this is even higher for Gen Z (29%) and Gen Y (32%) shoppers, reinforcing that sales drive action, particularly among younger shoppers.
And while sales conversion is understandably the number one priority for businesses right now, offering discounts also has the added benefit of attracting new customers. Gen Y (20%), Gen Z (20%) and individuals earning >$250K (26%) said they are also more likely to buy a brand online that they wouldn’t usually buy because it was on sale.

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Optimising for discount discovery will set businesses apart

There is an opportunity to recover abandoned purchase intent by making discount-discovery easier, as over a quarter of Australians (27%) say they searched multiple sites to find the best deal for an item but then lost interest in making the purchase altogether. This is even higher for Gen Y (39%).
 
The PayPal 2020 eCommerce Index found that Australians are more likely to use online codes to obtain discounts or find the cheapest price (59%), compared to physical coupons (32%). Gen Y shoppers (73%) are even more likely to use online discount and promo codes.
 
Consumers use dedicated sites or platforms to save money on online purchases including CashRewards (23%), Shopback (17%), Honey (12%) and Finder.com.au (9%) – but this varies according to generation. Gen Z are more likely to use discount-discovery platform Honey (29%), compared to cash-back platform CashRewards (13%). While Gen X (28%) and Boomers (20%) are more likely to use CashRewards, compared to Honey (11% and 7% respectively).
 
Mr Cowan concluded: “The 27% of Australians that have abandoned a purchase when they weren’t able to find a good deal presents a huge opportunity gap for businesses. To remain competitive and achieve maximum conversion you’ve got to offer sales. But more importantly, you’ve got to make sure you’re offering online sales that are easily discoverable.”

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[1]  PayPal’s research was conducted with Australians over 18 years old who own a smartphone. Deloitte 2019 estimates smartphone penetration in Australia at 91% and Statista 2015-2022 estimates smartphone penetration in Australia at 71% For the purposes of extrapolation, this document has taken a mid-point for smartphone penetration in Australia of 81%.
[2] PayPal’s 2019 Trends Report
[3] PayPal’s 2019 Trends Report
 

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