The tech and trends changing the game for online retail in Australia
28 May 2019
The Australian online retail landscape is undergoing a shift, with consumers and businesses changing the way they shop, and how they sell, respectively.
Sales drive action, but despite strong consumer demand for regular discounts, only 1 in 5 online retailers (19%) reported that they always have at least one sale running.
  • Australians love a sale, with seven in ten (68%) consumers always on the lookout for online sales or discounts
  • Over half of Australians (58%) have made an impulse purchase because of a sale, with shoppers buying an average of 2.7 impulse items with an unplanned spend of $108 per quarter
  • 5G technology could open new opportunities for retailers to leverage Visual Search and Shoppable Video

Tuesday, 28 May 2019, Sydney: The Australian online retail landscape is undergoing a shift, with consumers and businesses changing the way they shop, and how they sell, respectively. The PayPal mCommerce Index: Trends Report 2019, released today, reveals new technologies and trends which are changing the game for online retail in Australia.

This edition of the PayPal mCommerce Index explores the rise of the perpetual sales cycle, as well as the impact 5G is set to have on Visual Search and Shoppable Video capabilities. Not only do these trends and new technologies offer opportunities for retailers to attract new customers, but they can also drive revenue growth.

Australian consumers love a good bargain

Australian shoppers are becoming more savvy in their shopping habits, with the research finding that close to seven in ten Australians (68%) are always on the lookout for sales or discounts when buying online, and over half (58%) have made a sales-driven impulse purchase in the last quarter. Younger Australians are even more likely to always be looking for sales (Gen Z 77%; Gen Y 73%) as well as more affluent shoppers with incomes of $150K+ p.a. (74%), regardless of age.

The Trends Report shows that consumers have become conditioned to regular discounts from retailers, with half of all respondents (50%) saying they have waited until an item was on sale before buying it online. This skyrockets to three quarters of Gen Z (73%) and two in three Gen Y respondents (65%). As many as 16% (one in six) of all respondents said they only shop online when items are on sale.

In the last quarter alone, the average shopper bought 2.7 impulse items and spent $108 on unplanned purchases because they saw items on sale.  Gen Y are the biggest impulse spenders, buying an average of 3.6 unplanned items at a cost of $145 in the last 3 months.

Peter Cowan, Director Mid-Market and Small Business Partners at PayPal Australia said: “Sales drive action, but despite strong consumer demand for regular discounts, only 1 in 5 online retailers (19%) reported that they always have at least one sale running.

“This gap between consumers’ desire for finding a bargain and retailers sales activity highlights an opportunity that retailers can leverage to drive greater sales volumes and attract new customers. We found that over a third of Australians (37%) have bought a brand online they wouldn’t usually buy because it was on sale, which is huge for smaller retailers wanting to build brand awareness and win new customers.”

Sales must be mobile-optimised to maximise results

While more Australians currently shop the sales in-store (51%), the scales are shifting with the majority saying they prefer to shop the sales online (57%). The preference to shop the sales online is significantly higher for younger shoppers (Gen Z 63%, Gen Y 65%). Younger shoppers also shop the sales more on their mobile devices (Gen Z 33%,) than on their laptops or desktops (Gen Z 29%).

“If you’re on sale – you’ve got to be online and mobile-optimised, particularly if you’re targeting youth markets, where the majority do their online sale shopping via mobile,” said Mr Cowan. “Retailers should also think outside of the traditional sales periods and consider offering their customers personalised discounts throughout the year.”

Boxing Day, End of Financial Year (EOFY), Black Friday and Mid-Season Sales are the most popular sales periods in Australia. However, close to two in five Australians (37%) expect brands to offer online discounts outside of traditional sales periods.

For a list of Australia’s biggest sales periods, please see the end of this release.

5G – potential to power the future of online shopping

The Trends Report uncovered strong consumer interest in Visual Search* and Shoppable Video**, particularly among younger shoppers.

One in five Australians (20%) have already used Visual Search and half of those that are yet to try it, want to. Younger shoppers show stronger interest in Visual Search with 27% of Gen Y having already used the technology. Meanwhile, one in six consumers (16%) have already used Shoppable Video to find information or make a purchase, and nearly a third (29%) would like to use it.

Despite consumer interest and the business potential of these innovative shopping experiences, less than one in ten retailers have adopted Visual Search (8%) and Shoppable Video (5%) and close to half of all retailers were not even aware of these innovations when surveyed (Visual Search awareness 46%, Shoppable Video awareness 55%).

Most retailers however do understand the benefits Visual Search and Shoppable video could bring, with 82% expecting Visual Search and Shoppable Video would increase sales.

Zoe Ghani, Chief Technology Officer at THE ICONIC said: "With over 1,000 brands and 60,000 products on site, one of the approaches we take to helping our customers to find the products they want to shop is through visual search, as it can be hard to describe or select filter criteria for a specific item they are looking to purchase.

“THE ICONIC's 'Snap to Shop' feature allows a user to simply take a picture of an item of clothing (such as a jacket worn by a pedestrian across the road, a sweater on a mannequin in a shop front window or even in an image on Instagram), and then upload this photo into our app where they will be matched with similar or the same item available on THE ICONIC. 'Snap to Shop' has had great success to date and we're seeing more and more customers use this feature as visual search becomes a natural part of their shopping habits."

“Visual Search and Shoppable Video are still in the early stages of adoption, and to really make these technologies fly, the industry needs a high-quality mobile network to deliver these rich mobile experiences without lag,” said Mr. Cowan.

Two in five Australians (39%) said ‘search results taking too long to load’ would make using Visual Search an unsatisfactory experience, while over half (52%) said ‘video buffering’ would make Shoppable Video a disappointing experience.

"With the imminent arrival of 5G technology***, retailers will be able to better leverage innovations like Visual Search and Shoppable Video.   While many smaller operators would struggle to offer these tools on their own, more turnkey solutions are emerging.  Through partnering with eCommerce platforms and marketplaces that have, or are developing, visual shopping capabilities, a broad range of online retailers will be able to offer these experiences,” said Mr. Cowan. 

“And with search engines starting to offer built-in Visual Search on mobiles, it’s time for retailers to get their SEO foundations right by ensuring product captions are highly-descriptive and can be discovered and served to shoppers.

“One in five retailers (19%) said 5G will change mobile commerce as we know it.  No matter what size your business is, it is important that you are aware of how 5G and other emerging trends like the perpetual sales cycle will impact your business. Adopting these technologies could give you first-move advantage in an increasingly competitive market,” concluded Mr. Cowan.

Australia’s Biggest Sales Periods

By Consumer Participation

Boxing Day Sales

44%

End of Financial Year

44%

Black Friday

33%

Mid-Season Sales

33%

January Sales

21%

Click Frenzy

17%

Cyber Monday

17%

Back-to-School

11%

AfterYay

6%

Amazon Prime Day

6%

PayPal’s mCommerce Index, released bi-annually, surveys online payment behaviours and expectations of Australians and provides new insights into the growing mobile commerce landscape in Australia. The PayPal mCommerce Index: Trends Report 2019 is available for download here.

*Visual Search allows mobile users to upload a picture of a product, either from real life or found online – such as shoes, sunglasses or a vase – and find similar items for purchase.

**Shoppable Video brings clickable links directly into video on your own site or other channels such as YouTube. 

***5G is the next evolution of mobile network – a set of new systems that promises to make the internet work on your mobile device like a superfast fibre connection.

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About the PayPal mCommerce Index

The PayPal mCommerce Index: Trends Report 2019 surveys the payment patterns and expectations of Australian smartphone users and provides insights into the mobile commerce landscape. The research was commissioned by PayPal Australia Pty Limited (ABN 93 111 195 389 AFSL 304962) and was conducted by ACA Research (ABN 66 001 598 558) between Friday 29 March and Friday 12 April 2019.

Respondents completed an online self-completion survey, with a total of 1,018 consumers and 485 businesses taking part in the research. Sample was sourced through consumer and business research panels, with participants incentivised for completing the survey. The research was carried out in compliance with the AMSRS Guidelines and the National Privacy Principles.

The research contains general observations about trends in mobile commerce, and does not take into account the objectives, situation or needs of any specific business or individual. Numbers may not add to 100% due to rounding.

Generational Ages as at 2019:  Gen Z (18-24 years); Gen Y (25-36 years); Gen X (37-51 years); Baby Boomer (52-66 years); Older Australians (67+ years)

For more information regarding sampling, please refer to the ‘Research Overview’ in the Report available here.

About PayPal

Fueled by a fundamental belief that having access to financial services creates opportunity, PayPal Holdings, Inc. (NASDAQ: PYPL) is committed to democratising financial services and empowering people and businesses to join and thrive in the global economy. Our open digital payments platform gives PayPal’s 277 million active account holders the confidence to connect and transact in new and powerful ways, whether they are online, on a mobile device, in an app, or in person. Through a combination of technological innovation and strategic partnerships, PayPal creates better ways to manage and move money, and offers choice and flexibility when sending payments, paying or getting paid. Available in more than 200 markets around the world, the PayPal platform, including Braintree, Venmo, Xoom and iZettle, enables consumers and merchants to receive money in more than 100 currencies, withdraw funds in 56 currencies and hold balances in their PayPal accounts in 25 currencies. For more information on PayPal, visit https://www.paypal.com/about. For PayPal Holdings, Inc. financial information, visit https://investor.paypal-corp.com.

About PayPal Australia                 

PayPal has been operating in Australia since 2005 and has more than 7 million active customer accounts. PayPal enables Australian businesses to transact online and offline, from sole proprietors and developers to established large merchants. The PayPal service is provided by PayPal Australia Pty Limited (ABN 93 111 195 389) which holds an Australian Financial Services Licence number 304962. Visit www.paypal-media.com/au for more information and follow us on Twitter, Facebook, YouTube, LinkedIn and our PayPal-Forward blog.

Press Contact

To contact PayPal Australia media team, please email paypal@edelman.com

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