The latest ABS figures show that retail figures are flat. Indeed, they have actually contracted sharply by more than three per cent over the past year. At the same time, internet shopping is picking up and growing. So it’s not like people have stopped shopping. It’s just that the mix and medium is changing with more opting to shop online.
Research from the Australian Communications and Media Authority shows that blokes are the biggest users of online shopping. According to ACMA, 74 per cent of males are likely to have made purchases online compared to 65 per cent of women. The most popular goods purchased were travel goods and services (56 per cent), event, concert or movie tickets (43 per cent) and household goods such as furniture, electrical appliances and computer equipment (37 per cent). The ones more likely to take to online shopping are in the 25 to 34-year-old age bracket. The older you get, the less likely you are to use it.
More people these days use stores to try the product and check it out, almost like a fitting, and then they go and buy online. And if they want second hand goods, they go to eBay.
According to this report, analysts at Frost & Sullivan predict that online retailing in Australia will grow by half over the next four years. According to the analysts, 39 per cent say they are attracted by cheap prices, 29 per cent by convenience, 17 per cent by the range of goods available and 12 per cent by the ease of locating the goods they are looking for.
Certainly, just about all my shopping for books is done online now. It's a bigger range and I am more likely to find what I am looking for. I have started buying clothes online and the next item will probably be electronic goods.
Online shopping is said to be popular for people with money or for those who are time poor. An obvious growth area for online retailers would be the elderly who can't get out that much and who are more likely to be house-bound.
Earlier this month, Australia’s biggest mall landlord and one of the world’s most prominent players in the retail space, Westfield, unveiled an online portal to make money off the small but growing number of people who shop on the internet. The beauty of the exercise is that it would allow people to buy from different stores at a single check out.
Still, there are some problems with internet shopping. Like, for example, chasing up the resellers with queries or problems. There are late arrivals and there's the difference between what was offered and what actually arrived. And if you are dealing with smaller outfits, there would be concern about theft of credit card details. According to research from security software firm Webroot, people have bad online shopping habits that make them vulnerable to phishing and other scams.
As reported here, people can find sites using a Google search and then discover those places are dodgy. It's all part of a strategy. Those places appear high in Google searches because of all the online complaints. The more complaints, the more traffic, the more sales.
Nevertheless, it’s a growing trend and some might well ask whether the days of bricks and mortar shops are over or at least as limited as the days of print newspapers
Gerry Harvey from Harvey Norman is predicting a horror Christmas for retailers and wants the government to impose the GST on sales made over the internet. Significantly, his competitor Ruslan Kogan who runs Kogan online electronics retail business has reported a 48 per cent lift in revenues. He is attacking Gerry Harvey for having a bad business model, a relic of ancient times when people had to go to a shop to buy anything and when the shops controlled all the distribution. The internet has undermined that model severely. You can hear our podcast interview with Kogan here.
The Federal Government is playing down reports that it’s considering imposing the GST on imported goods. Just how that would work is anyone’s guess. The GST on its own is administratively complex, this would make it even more so. Besides, most of the stuff that tends to be purchased online is small and relatively low-priced.
That’s not to say that bricks and mortar shopping is going away. As business commentator Michael Pascoe says, Amazon hasn’t wiped out the American book market, it’s made it better. The big problem for retailers, he says, is working out how to build a strong online presence and so far, none of them have done it properly.
How much do you use online shopping? How does it compare? Do you trust it? Have you had any problems? Which do you prefer? And would you pay GST on online purchases?