Big retailers inhibiting local online shopping market

Australia’s online shopping market is underdeveloped and is being hindered by a “lack of support” from the management of major retailers.

“Despite moves by stores including Big W, JB HiFi and Dick Smith, the small number of e-commerce participants and a lack of sufficient internal support from senior management continue to inhibit progress in this area,” according to research firm Frost & Sullivan.

Other inhibitors to the development of a local eCommerce market include the strong physical store presence in capital cities and metropolitan areas, and Australian consumers' limited acceptance of the typical online precursors - mail order and catalogue sales.

Frost & Sullivan’s just-released Australian eCommerce Market 2010 report also found another inhibitor to the development of a local eCommerce market included security concerns with one in 40 of the survey respondents (2.5%) having indicated that their credit or debit card had been stolen in the last 12 months.

Frost & Sullivan suggests that the Australian market needs to see the online launch of several retail chains within the next 12 to 24 months to provide the catalyst for further expansion.

The report includes the results of a survey of more than 1,000 active online consumers to provide purchasing information relating to five product categories: electronics, computers, books and CDs/DVDs, jewellery and fashion accessories, and clothing and footwear.

Total consumer e-commerce expenditure in the 2010 calendar year, excluding online services such online ticketing and events, travel, music downloads and financial services, is forecast to reach $12 billion. This equates to per capita expenditure of approximately $536 per year, which is slightly behind the US and UK markets.

Expenditure is predicted to show moderate growth over the next four years, rising to $17.7 billion by 2014 with a compound annual growth rate of 10.2%.

Most shoppers (64%) will visit a search engine before making a purchasing decision and more than half (57%) seek out product comparison sites, indicating that consumers are increasingly reaching out to specific sites for product research rather than just conducting a general internet search.

“The number of Australian shoppers using international retail sites confirms that there is a large untapped potential for Australian retailers to develop a local online customer base. However, we are unlikely to see major growth in this sector until more of the big name retailers get online,” Frost & Sullivan senior research manager, Phil Harpur said.