Wednesday, June 19, 2024

Australian consumers to spend $4.8 billion on online marketplaces this ‘peak’ season

Australian consumers look set to spend $4.8 billion this year on online marketplaces this Black Friday and Christmas as they look to get the most value from their baskets, new research from e-commerce delivery leader, ShipStation suggests.

The research was commissioned by ShipStation’s operating company, Auctane, in partnership with retail consultancy, Retail Economics. With eight markets surveyed (Australia, UK, US, Germany, France, Spain, Italy and Canada), the ‘Peak Season Report 2023 highlights consumer spending intentions, channel preferences and delivery deal-breakers this peak season.

The state of play this peak season in Australia 

As interest rates remain high and cost of living pressures continue to impact personal finances in Australia, peak season 2023 is set to be impacted by a cautious consumer backdrop, with 78% of Australian consumers surveyed stating they plan to cut back on non-food spending related to Black Friday and Christmas – up 24% on last year. Specifically, 38% of Australian consumers surveyed cited inflation and 20% highlighted a lack of savings, as their biggest concerns heading into the peak season this year.

Retailers appear to be more optimistic about prospects for peak demand this year, with almost two-thirds of online retailers surveyed stating sales volumes will broadly align with last year and 24% expecting volumes to rise on last year.

While the consumer backdrop might be tough there is reason for optimism for online prospects, with 57% of consumers across the eight markets surveyed planning to do most, if not all, of their holiday shopping online – up from 49% last year. Looking at the Australian market, 72% of consumers plan to do some of their shopping online, and from this, 48% expect to do the majority of their shopping online.

Early shopping: a rising Australian trend 

Australian consumers are starting their holiday shopping earlier this year as they look to stretch budgets, with 35% of Australian consumers surveyed stating they are planning to start before October. The research also suggests that retailers will also look to jump on this trend. One in four merchants surveyed intend to increase the number of their holiday promotions this year, with the same proportion planning to launch promotions before October.

The impetus to shop early and benefit from promotions over the holiday season is particularly pronounced among younger shoppers. Across all markets surveyed, 44% of digital natives (consumers under 45) intend to engage in their festive shopping during promotional periods like Black Friday and Cyber Monday.

Conversely, older shoppers surveyed report being more likely to adopt more traditional approaches to better manage budgets for their festive purchases. These include self-imposed spending limits, trading down to value brands and using cash to help them stick to their budget.

Auctane VP, Head of ANZ David Boyer says:As we approach this year’s Black Friday and Christmas season, Australian consumers are gearing up to spend an impressive $4.8 billion on online marketplaces. In the face of economic caution marked by high interest rates and cost of living pressures, it’s encouraging to see the majority of Australians planning to do their shopping online. This shift may be indicative of changing consumer habits, particularly among younger shoppers who are seeking out holiday promotions and early deals.

“While cost remains the king of considerations for Australian consumers, it’s interesting to note that they are willing to pay a bit more for quicker delivery, with 57% ready to shell out $6-7 for same-day delivery. These changing dynamics are driven by a digitally-savvy demographic under 45, who prioritise speed and convenience in their online shopping experience.

“In the face of cautious economic sentiment, it’s promising to see retailers are optimistic about peak season demand. As we navigate through these shifting consumer trends, it’s clear that the ecommerce landscape is evolving, and we at ShipStation are committed to helping businesses adapt and thrive during this pivotal shopping season.”

Online marketplaces rising in popularity with Australians 

Online marketplaces look set to be the most popular channel of choice for online shoppers this peak season. The research shows that 80% of Australian consumers surveyed expect to shop on online marketplaces, with this figure rising to 90% across the markets surveyed. The research also suggests that around one in every two online orders over the holiday season looks set to be made via a marketplace.

Driving the popularity of online marketplaces is that consumers feel they offer better value and provide a platform that allows them to easily compare products and prices. In fact, 72% of Australian shoppers surveyed believe online marketplaces offer better value than individual retailers, and almost half of Australian consumers (48%) state the main benefit of online marketplaces is that they offer more competitive prices and deals. Delivery also plays a vital part when it comes to shopping on online marketplaces, with 62% of Australian consumers believing they usually provide a fast and reliable delivery experience.

Cost is still king in Australia vs other markets 

While there is a shift in consumer delivery priorities during peak season in the other markets surveyed, with speed of delivery becoming more important during holiday shopping, in Australia, cost remains by far the most important shipping feature for consumers. 78% of Australians surveyed highlight the cost of delivery as the most important factor when making an online purchase.

With this in mind, it shouldn’t come as a surprise that 45% of Australian consumers surveyed are concerned that shipping costs are too high during the holiday season. Alongside this, 42% of Australians are also concerned about long scheduled delivery times and 38% are worried about late deliveries or deliveries arriving when nobody is available to receive it, and 37% are worried about missing/stolen parcels.

Interestingly, while Australians surveyed expressed concern about delivery costs, many are willing to pay for a typical $30-50 online purchase to ensure it arrives quicker. In fact, 57% of Australian consumers state they would pay $6-7 to ensure same-day delivery and 42% are willing to pay that price for next day delivery. On the other side of the spectrum, almost 40% of Australian consumers surveyed state they would never pay extra for a premium delivery service. There is a balance to be struck when it comes to shipping costs, but the findings suggest that Australian consumers are willing to pay for a typical online purchase when time pressure becomes a critical factor.

Across the markets surveyed, willingness to pay rises to as high as 78% among under 45s – the most commercially significant consumer demographic for online retail. These digital-native shoppers, often time-poor, place a high value on speed and convenience.

Download the full report here: ‘Peak Season Report 2023.’

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