After significant growth in peak pandemic years, Australian consumer online retail spending has stabilised, according to the Australian Ecommerce Report 2023 which was released by IAB Australia and Pureprofile.  

The report found that 67% of consumers reporting convenience is still the number one reason for purchasing online, however with recent rises in the costs of living, the report also found consumers are increasingly focusing on discounts, loyalty programs and seeking price comparisons to minimise unexpected price increases when they shop online.  

According to the report, retailers must look to win over cost-of-living pressured online shoppers by ramping up value propositions and providing relevant shopping experiences that are suited to the current economic climate.

Gai Le Roy, CEO of IAB Australia comments, "Australian consumers are increasingly enjoying a mix of online and in-store shopping, but its clear retailers face a new set of challenges with shoppers who are price sensitive seeking value for money in their brand choice."

"We know that constant discounting and undercutting competitors is not a long-term strategy, but retailers will need to consider how to offer a clearly articulated value exchange for consumers."

Martin Filz, CEO of Pureprofile says, "Pandemic behaviour shifts have become sustained habits for consumers with personalisation and relevance now the expectation, along with increased convenience and faster delivery. However, its good news for retailers with online retail holding stable as consumers maintain the same frequency of purchase as a year ago, even if they are more cautious."

According to the report, loyalty programs are providing increasingly important with 62% of online shoppers increasing their usage as they look to enhance their shopping experience while saving money.

Nine in 10 online shoppers remain signed up to at least one shopper rewards program with 44% of those signed up to a rewards programs have 4 or more cards. Half (52%) of online shoppers pay a fee to subscribe to a retail loyalty program such as Amazon Prime, eBay Plus, Wesfarmers OnePass, Woolworths Delivery Unlimited or Costco Membership.

The report found that while these loyalty programs are providing retailers with rich behavioural data, trust, transparency, and a clearly articulated value exchange with benefits delivered to consumers is key to underpinning successful retail marketing.  

Concern with how retailers use shopper data increased over the last year with 60% reporting some level of concern about how data collected via loyalty cards (up from 51% in 2022) and 60% concerned about data collected via transactions (up from 55% in 2022). 

For consumers subscribing to product delivery services such as meal preparation kits there has been an increase in the number of people indicating that a key reason for their patronage is related to price assurance and knowing how much the product will cost (up from 35% to 45%) which plays an important role in budget planning and management.

Key learnings for retailers include:

• 62% of online shoppers have increased the amount of time they spend shopping around doing research. Having information readily available and an easy research process will increase shopper confidence.
• Search remains key to 64% of shoppers in their process of discovering brands when shopping online, but it should be combined with other channels to maximise brand and sales outcomes.
• Half of online shoppers are aware of shoppable advertising, and 16% have purchased this way (26% of 18-29s).
• Retailers own stores and communications are also key to shoppers discovering products and brands. 60% of online shoppers often read content produced by retailers.
• Retailers should amplify communication of their authentic ethical and sustainable credentials as they are compelling reasons for brand choice particularly amongst younger generations.
• Social media and influencers are key to millennial and gen Z online shoppers with 52% agreeing social media is an important part in how they find products they buy, and 41% identifying influencers as a useful source to discover new products.

Additional data points include:

• A third of online shoppers have increased their online shopping since recent rises in costs of living, while 19% have decreased their usage.
• Clothing, shoes, and fashion remain the most popular online purchases over the last 12 months, while Amazon continues to be the most popular online retailer. 20% of online shoppers now buy medications online.
• Some 20.6 million Australians aged 14 years+ visited a retail website or app in a month in July 2023, spending on average 351 minutes each over the month. Consumer electronics (17.4m), vouchers and rewards (16.4m), grocery and supermarkets (15.2m) and department discount stores (14.5m) were the most popular.
• Purchasing ethical and sustainable brands is still as important to online shoppers this year. Purchasing from ethical brands was important to 45% of consumers (46% in 2022), 47% prefer to purchase from sustainable brands (47% in 2022) and 58% preferring to buy from Australian owned brands (64% in 2022)
• 24% of online shoppers subscribe to a product delivery service such as meals, cleaning products, toilet paper or wine, reporting convenience as their major driver. However, 53% of shoppers who previously subscribed to product delivery services are no longer subscribed, with most reporting they did not want to be locked into a recuring purchase.
• 6 in 10 (59%) consumers are shopping online every 2-3 weeks, maintaining frequency of shopping over the last year.
• 50% of online shoppers buy groceries online at least once a month and 73% of online shoppers buy non-grocery retail products online at least once a month.

The Australian Ecommerce Report 2023, which is now in its third year, is based on research conducted with 1,000 Australian online shoppers during July 2023. It examines the consumer attitudes, behaviours and influences driving ecommerce in Australia.