Smartphones drive online sales growth, new research reveals

The online retail industry is heading into a period of maturity as businesses start acquiring each other and the market consolidates, as new research shows expenditure is set to reach $26.9 billion by 2016.

Most of the growth is occurring on mobile devices, research from Frost & Sullivan and PwC has found, with more than 57% of online shoppers increasing their level of spending over the last 12 months via mobiles.

Expenditure for 2012 is also set to reach $16 billion, with fashion and jewellery tipped as the next big growth areas.

“Most of the trends we’re seeing are pretty similar, but one thing that’s stood out to me is mobile usage,” Frost & Sullivan senior researcher and report author Phil Harpur told SmartCompany this morning.

“That’s where we’re seeing significant increases on the prior year.”

Harpur says the reasons why people shop online, including cheaper prices and faster delivery, don’t change much year to year as the market continues to grow. What has changed, he says, has been anything to do with mobile devices.

For instance, 62% of Australians aged between 15 and 65 who use the internet own a smartphone – and 34% say they shopped online through a mobile device in the past year. The primary uses are for finding a nearby store and actually comparing prices while shopping in store, which has become a pain for bricks and mortar retailers.

“This is just another sign of consolidation that we’re seeing, and it’s a sign of a maturing market,” Harpur says.

“Online shopping has been here for 10 years but it’s only in the past two or three that we’ve seen a significant acceleration driven by the average consumer.”

Mobile use, Harpur says, is also complicating the online retail industry as it becomes more difficult to differentiate between channels.

“As mobile and tablet usage becomes more available, it adds to this omnichannel experience, but it’s also becoming increasingly complex. Because you may buy it online, but search for prices through a mobile device, and speak to someone in the store.”

“The nature of the multichannel experience is dominantly being driven by mobiles.”

There is one area, however, where Harpur says businesses continue to lag – location services.

“It hasn’t caught on much here yet,” he says. “And that’s the area we really lag when compared to the US.”

“Whether it’s the targeting of online shopping when people are close to you, or comparison shopping or barcode scanning, that’s something where retailers are falling behind.”

Consumers aged 15 to 25 identified price comparison and transparency as the most important reason for shopping online, which, the report notes, has “implications for retailers currently targeting this demographic”.

The overall trends among shoppers have remained steady: 88% expect to increase or maintain their spending and 75% of shoppers buy from offshore retailers. Overall, about 45% of spending goes overseas.

However, the report says that the figure will drop as domestic retail increases its presence.

As for the reasons most people shop online, 55% said they do so because the prices are lower, up from 50% in 2011. However, only 15% said they shop in order to avoid crowds, down from 20% last year. And 11% said they do so because it’s easier to locate the product they’re looking for, up from 9% last year.