Online retail to reach $37.7 billion by 2013: Report

Online commerce is expected to reach $37.7 billion in 2013, from $30.2 billion this year, led by a rapid increase in online spending for groceries, travel and apparel, according to a new research report from PayPal, compiled by Forrester Research.

The Secure Insight: Changing the Way We Pay report has prompted warnings from PayPal Australia managing director Frerk-Malte Feller for businesses to set up as many ways as possible for users to pay this year.

“Businesses must think about how many touch points they really have with consumers, and recognise that whenever you are informing your customer of something, it needs to become a purchase point.”

“Previously a business might send out a digital catalogue or an email. Now you need to be able to allow customers to buy something from that, or even on mobile, to expand those payment options. You need to accept a sale wherever the customer is.”

The new report, which was also compiled in conjunction with Nielsen and the Australian Centre for Retail Studies, predicts 12% year-on-year growth for eCommerce until 2013, with travel remaining the leading category at $7.4 billion this year, and $7.9 billion in 2012.

Groceries are the second largest category, recording $5.5 billion, although this sector is expected to grow to $6.4 billion next year and to $7.3 billion in 2013. A number of online retailers including Catch of the Day and DealsDirect have opened new grocery divisions to capitalise on the trend, while Coles is also trialling a new online ordering and delivery feature.

But despite these two strong categories, the biggest growth is in fashion. The sector grew 20% in 2011 to $1.7 billion, and will reach $1.8 billion next year. The next fastest growing sector was music and video, up by 17%.

Feller says the results clearly display a growing comfort with online retail, and provide hope for local businesses, given 73% of all online consumption is taken up by domestic retailers. The report states there is a “consumer preference to buy Australian goods”.

“Over the last year a number of major Australian retailers have entered the online space, and as more and more Australians move online for the first time, an increasing number of local retailers are beginning to respond to consumer demand.”

Feller says the market is now receptive for traditional retailers to start moving into the online space.

“A year ago, many retailers were still in some kind of denial, and saw imports as a threat. Now, it’s all about how you can go about doing it, and merchants are recognising that online is not just one channel, but you have multiple channels.”

“If you look at what many other businesses are doing, they have Facebook stores, and use apps, and are taking part in things like Westfield’s online mall. There are now multiple ways to contact the consumer.”

Feller says it is now imperative that businesses start exploiting these channels and offer consumers multiple ways to purchase a product.

“You really need to think about those touch points you have with consumers, especially coming up to Christmas.”

“You need to integrate purchase opportunities, like putting a payment option in an email. It’s all about making sure that whenever the customer wants to buy something, you’re available right then and there.”