COVID pushed commerce online and it’s a permanent shift, while social commerce spend has soared, up 700% from 2019 – PayPal Australia study
23 Nov 2021
The 2021 eCommerce Index from PayPal Australia was released today revealing trends across online shopping post-COVID, social commerce, subscriptions and conscious consumer attitudes in Australia.
Social media has become an invaluable channel for businesses to tell their brand story, showcase their latest products and services and connect in an authentic way with their customers.
  • Post-pandemic, Australians say they’ll keep doing half (49%) of their shopping and bill payments online, with consumers under 40 years planning to keep doing more than 60% online
  • Spending via social has risen sharply, up 40% year-on-year and up 700% from 2019. A quarter of Australians now shop on social media, rising to 1-in-3 for consumers under 40 years
  • 90% of Australian businesses are on social media and over a third (35%) sell on social, with sales via social platforms accounting for 5% of sales across all online businesses surveyed
  • 28% of Australians signed up for a new subscription during COVID and 66% of consumers now have a subscription service.
  • 46% of Australians prefer to buy from brands that are environmentally and socially responsible and nearly 1-in-5 have boycotted a product or brand based on their values

The 2021 eCommerce Index from PayPal Australia was released today revealing trends across online shopping post-COVID, social commerce, subscriptions and conscious consumer attitudes in Australia.

The Index, now in its sixth year, found Australians currently do more than half (52%) of their shopping and bill payments online – a increase of 14% on pre-pandemic levels (38%). And while Australians will shift a small amount of their shopping back in-store (3%), they plan to keep doing about half (49%) of their shopping and bill payment online post-pandemic. Consumers under the age of 40 plan to continue doing at least 60% of their shopping and bill payment online post-COVID (Gen Z 60% Millennials 62%).

Amid the lockdown restrictions, 1-in-6 Australians (17%) say they started regularly shopping online for the first time, with the pandemic bringing more first-time Gen Z shoppers online (29%) than Boomers (10%). Many Australians also indulged in online ‘retail-tainment’ with just over 1-in-4 Australians (26%) saying they enjoy online shopping to pass the time, and nearly the same (24%) finding online shopping more convenient that they had thought.

The PayPal eCommerce Index 2021 also reveals that 82% of consumers with smartphones now shop via their mobiles and almost a quarter (24%) only shop online on their mobile. A side effect of the pandemic saw the number of consumers shopping via mobile plummet last year to a five-year low of 56%, presumably as restrictions drove higher use of fixed computers. However, mobile commerce has now more than bounced back. The level of Australian businesses optimised for mobile commerce has continued to grow steadily and is now at 69%.

See the full 2021 eCommerce Index from PayPal Australia

Social Commerce Spend Skyrockets

During COVID many consumers turned to social media for entertainment, to keep in touch with friends and family, and increasingly to shop. A quarter of Australians (25%) now shop on social media, a figure that jumps to 1-in-3 for consumers under 40 years of age (42% of Gen Z shop on social and 30% of Millennials). One-in-seven Australians (14%) now makes a purchase via social media at least once a month.

While the number of people buying on social has remained stable year-on-year, what’s remarkable is the sharp increase in average social spend. The average Aussie now spends $35 a month via social channels, up 40% year-on-year from $25 a month in 2020 and up 700% from $5 a month just two years ago in 2019. The biggest social spenders are Gen Z and Gen Y – each spending more than $50 a month on social purchases on average.

Nine-in-ten Australian businesses (90%) now have a social media presence however only slightly more than a third (35%) sell via social, with social commerce accounting for 5% of sales across all businesses that sell partly or wholly online. The Index did find however, that 30% of businesses will be prioritising investment in social media over the next 12 months to help drive sales.

Almost half (47%) of Australians that buy on social do so at least once a month with a quarter (25%) buying on social at least weekly. The most popular platforms for Australian social shoppers are Facebook (70%) and Instagram (42%) with Snapchat and TikTok neck-and-neck at 12%, Pinterest at 11% and Twitch at 8%. Unlike other generations, Gen Z social shoppers’ top platform is Instagram (62%) and while they still shop on Facebook (61%), they are buying more through a broader range of social platforms including Snapchat (27%), TikTok (21%) and Twitch (16%).

Social Gets the Eyes, Website Get the Buys

Australian businesses appear to have embraced social media as a marketing channel. Ninety percent (90%) promote themselves on social with 75% marketing via social at least weekly and 45% on a daily basis.

Always keen for a bargain, 1-in-5 Australians (21%) follow their favourite brands on social media to keep on top of sales and discounts, with Gen Z leading this behaviour (38%). Gen Z shoppers also find inspiration on social media – a quarter (24%) say they discover products on social media that they don’t find anywhere else (vs 14% national average).

While social media may inspire shoppers, it’s still websites that are preferred for actual purchases. Two-in-five Australians (40%) say that after seeing a product on social media, they prefer to go to the website to purchase. Interestingly, the preference for transacting via website holds true even for young shoppers (Gen Z 59% prefer to buy via website).

Peter Cowan, Managing Director of PayPal Australia, said, “Social media has become an invaluable channel for businesses to tell their brand story, showcase their latest products and services and connect in an authentic way with their customers. With almost half of Australian businesses posting on social media daily, it’s a natural evolution that businesses want to offer social audiences easy and immediate paths to purchase for the products and services they are seeing on their feeds.

“The incredible amount of time we all spend on social media, especially younger people, is positioning social commerce as one of the biggest trends we’ll see in online shopping over the next few years with 42% of Australian Gen Zs shopping on social, 70% higher than the one-in-four average.”

The Rise of Subscription Services

Over a quarter of Australians (28%) signed up for a new subscription during the pandemic and today two-thirds (66%) have at least one subscription, spending an average of $62 per month on subscription services. Business experience backs this up with 66% of businesses with subscriptions saying they saw increased consumer take-up during COVID. Consumer subscription use has increased significantly from 50% consumer uptake and $32 average monthly spend in 2018, the last time this area was researched.

Developing a subscription service was also a ‘COVID pivot’ strategy for some businesses. One-in-six Australian businesses (17%) offers a subscription service with nearly half of those (46%) launching a new subscription offering during the pandemic. The move to offer subscriptions during COVID was most common for businesses in retail trade where 10% created a new subscription service during that time.

The uptick in consumer subscriptions is being led by Australians under the age of 40, with more than 4-in-5 Gen Zs (83%) having a subscription, followed by Gen Y (69%). It’s also being driven by adoption of video streaming and audio services, with over half of Australians (55%) signed up to movies and TV content such as Netflix and Stan, and nearly 1-in-3 (32%) on music and podcast subscriptions. Movies and TV subscriptions were the top category across all age groups, with even the Boomer generation on board, half of whom (49%) are now subscribed to a video streaming service.

Subscriptions are also being offered for less common products and services – with 5% of Australians having subscriptions for likes of toilet paper, mindfulness apps and pet supplies and accessories.

While Australians are happy to sign up for subscriptions, over half (55%) have subsequently cancelled or unsubscribed. The top reasons were related to cost – over 1-in-5 (23%) Australians have signed up to a subscription for free, and then cancelled it when they had to start paying. This approach was even more common among Gen Z (43%). Many also opted out of a subscription if it was too expensive (19%). This suggests businesses need to ensure their free trial or discount period demonstrates ongoing value for consumers and that they develop a pricing policy optimised to reduce cancellations while still delivering margins.

Mr Cowan said, “Businesses were looking to adapt during the pandemic and while subscription services aren’t going to work for every business model, they can be an effective repeat revenue generator. Businesses with subscriptions say they saw revenues increase on average by a third (36%) after implementing a subscription model.

“Consumers, especially younger consumers, are now very open to subscriptions across a broad range of categories and they can be a great way for businesses to retain customers, ensure a recurring revenue stream and provide a convenient and personalised service to customers.”

Subscription businesses were divided on the outlook for subscriptions post-pandemic. While 32% saw an increase in subscription use during the pandemic and expect this higher level to continue, an almost equal number (34%) saw an increase in uptake but expect subscription use to now drop back to pre-COVID levels.

Conscious Consumers call for Value-Driven Brands

Along with price and value, Australian consumers are increasingly thinking about the impact their purchases make on the environment and society at large. However, Australian businesses appear to be lagging consumer perceptions.

While almost half of Australian consumers (46%) say they prefer to buy from brands that are environmentally and socially responsible, only 28% of Australian businesses say they are committed to selling or producing environmentally and socially responsible products or services.

Additionally, more than half of Australian consumers believe businesses should be held responsible for their environmental and community impact (54%) and could do more to combat climate change (52%), yet only around 38% of businesses agree with the same statements. And although 45% of consumers prefer to buy from brands that use environmentally friendly packaging and shipping materials, only 27% of businesses have adopted these measures.

Almost 1-in-5 Australian consumers (18%) has boycotted products or services due to a brand’s corporate values or behaviour, a number that increases to 1-in-4 for Gen Z (25%). This has almost doubled since 2019 (10% overall, 19% Gen Z in 2019). On the business side, 10% have stopped selling a product because it was bad for the environment and another 10% have stopped purchasing a product or service in their supply chain due to Fairtrade considerations.

Slightly more than a third (35%) of businesses identified as purpose-driven or values-driven, and a quarter of businesses have mission statements that included commitments to environmental (25%) or social responsibility (24%).

A minority of Australian businesses (20%) said that price, product features and convenience are more important to their customers than ethical considerations, yet only 27% felt that businesses need to adapt to changing consumer demand for more environmentally and socially responsible products.

“Consumer preference to buy from businesses that do the right thing environmentally and socially is a growing trend that represents both a challenge and an opportunity. However, paying attention to the issues that matter to your customers and paying attention to your bottom line don’t have to be mutually exclusive activities.

“When businesses take action on social and environmental issues and transparently communicate their values, it can attract new customers, build brand loyalty and drive sales,” Mr Cowan concluded.

See the full 2021 eCommerce Index from PayPal Australia

For further information: To contact PayPal Australia media team, please email PayPalAU@edelman.com
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