Home Articles Why is the future looking bright for online retailers?

Why is the future looking bright for online retailers?

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Let’s see what these online retailers have been up to. First, many no longer view online retailing simply as a sales and marketing channel but, as a distribution and supply chain optimisation strategy as well. They are investing more in a distribution model that sees their product being delivered to the customer when (and where) it suits them.

According to the NAB Online Sales Index, traditional sales totalled $220 billion in the year ended June 2012, with online retail spending at $11.7 billion – both traditional and online have experienced strong growth rates in recent months.

The index also shows that domestic retailers remain the dominant force in online sales. Many retailers are taking multi-channel approach by developing an online presence while maintaining their traditional storefront too.

Based on up to 2 million non-cash transactions per day, scaled up to replicate the broad economy, the index provides key insights into online spending in the retail goods space, capturing domestic and international trends, as well as regional and age demographic trends. The index is produced monthly but the inaugural index incorporates data back to January 2010.

What are the key insights from the July 2012 online retail sales index?

Online sales appear more stable over the last quarter, compared with the volatility experienced in early 2012. However, although online spending continues to grow at a strong rate, the scale of online sales remains modest when compared to traditional retail sales. Online retail spending is equivalent to just 5.3% of the traditional sector.

Domestic sales growth increased by 24% year-on-year in July. However, international sales really surged forward – growing by 29% year-on-year.

Domestic retailers continue to be the dominant force in online retail sales, although trends in individual categories remain quite divergent. The Household Goods & Electronics and Toys & Media sectors have been weak given these products are typically more discretionary in nature.

Those aged in the 30s and 40s continue to click and buy with enthusiasm. However, the under 30s are lagging, preferring to buy from international retailers – around one-third of their spending is international, compared with around one-quarter for the other groups.

Regional Western Australia is still supporting online growth, recording 37% year-on-year per capita growth, and online sales in the state have outperformed the rest of the country, thanks to buyers in their 30s, 40s and 50s.

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