Tuesday, June 18, 2024

E-commerce retailers must consider both convenience and value to succeed

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

The report found that 67% of surveyed consumers see convenience as 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.

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

“We know that constant discounting and undercutting competitors isn’t a long-term strategy, but retailers will need to consider how to offer a clearly articulated value exchange for consumers.”

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

Nine in 10 respondents remain signed up to at least one shopper rewards program with 44% of those signed up to a rewards programs have four or more cards.

52% 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 is 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.

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