One of the many trends accelerated by the pandemic was the rapid rise of ecommerce.
Balance Internet, an ecommerce agency founded in 2008 that’s a part of Publicis Groupe ANZ, is seeing a significant reallocation of resources among media agencies to ecommerce, a shift that reflects the changing consumer behaviour, with an increasing preference for online shopping.
Sebastien Klett, Balance Internet's director of solution architecture and strategy, said that ecommerce platforms are viewed as vital business sales channels, offering unique advertising opportunities such as sponsored product listings, display ads, and targeted promotions.
"Media agencies are spending more in these channels, recognising their potential to reach and engage online shoppers more effectively,” he said.
He said that the increasing adoption of omnichannel experiences further underscores the significance of ecommerce media spend, as by promoting and investing in ecommerce, media agencies can effectively enhance brand visibility and reach across all channels.
“Another factor driving the spend is the availability of first party data,” said Klett.
“This data provides insights into consumer behaviour, preferences, and purchase patterns, enabling media agencies to tailor their advertising strategies and campaigns more effectively.
“First party data not only enhances targeting and personalisation but also facilitates accurate measurement of campaign performance and ROI.”
Klett said the ecommerce landscape in Australia is experiencing remarkable growth - last year, retail spending hit a record $353 billion, showing a 9.2% YoY increase, with 18.1% of this spending came from online transactions, rising by 1.7% from the previous year.
“This growth doesn't happen in a vacuum. It's an outcome of a notable shift in consumer behaviour, gravitating towards online shopping and digital experiences,” he said.
“The convenience, ease of access, and the vast array of products and services that online offers have all contributed to its performance.”
Klett said that businesses that adapt and cater to this evolving consumer behaviour by utilising digital solutions to augment their online presence, streamline their operations, and match the ever-changing needs of their customers are the ones that benefit most from the booming ecommerce market.
“When we look at the trajectory of the Australian ecommerce market, it's evident that the future of this sector is full of promise and opportunities for businesses ready to ride this wave.”
Those opportunities mean that Balance Internet has an “optimistic outlook” on the future of the industry, according to Kostya Ogar, MD of Balance Internet, due to such projections as retail bouncing back to pre-pandemic growth rates by 2024, mirroring a similar recovery pattern for online transaction penetration.
“However, the exciting news for retailers and all businesses in the ecommerce space comes from further afield. By 2033, it's expected that approximately one in every three dollars spent in retail will be online,” said Ogar.
“This aligns with forecasts suggesting a significant increase in ecommerce users in Australia, projected to reach $21.31 million by 2027.”
Ogar said that the growth observed in the ecommerce market is not a passing phase, but the beginning of a long-term shift.
“The rest of this year and beyond promises a vibrant period for digital commerce in Australia, creating a climate ripe with opportunities for businesses equipped to embrace these changes and meet evolving customer needs,” he said.
Given the economic climate of 2023 and the escalating cost of living, Ogar said that creating and maintaining customer loyalty is paramount in a marketplace as competitive as ecommerce, and to achieve this, businesses must consistently provide customers with personalised, relevant experiences that add value.
“At the same time, businesses need to recognise the importance of evolving their digital capabilities,” he said.
“It's not enough to have a digital presence; businesses need to ensure that their digital strategies are at the forefront of their operations. Investment should concentrate on digital-first initiatives, emphasising value creation and improved customer experiences.
“In my experience, the businesses that stand out in the competitive ecommerce landscape are those that place customers at the heart of their strategies. Foster strong customer relationships by offering your customers personalised and engaging experiences through embracing innovation. This could mean employing tailored messaging, customer buyer journeys and/or account-based marketing campaigns.”
Looking at what ecommerce trends are emerging locally to keep an eye on, the duo said that experiential ecommerce, where brands create immersive shopping experiences through online-only products, custom bundles and subscription models, has been increasingly prominent.
“We've seen firsthand how businesses can benefit from engaging their customers in an explorative journey and enhancing brand value,” they said.
“Creative commerce (creativity in the way brand experiences are stitched together with online and offline commerce) is giving brands the chance to think outside of the box in the ways they connect with consumers.
“There are impressive demonstrations of creative commerce driving increased engagement and commercial success in market. For example, the winner of the Creative Commerce Grand Prix at this year’s Cannes Lions International Festival of Creativity, Saudi Arabian food delivery app HungerStation, uses AI to help users choose their food orders based on what they are craving subconsciously.”
Mobile commerce also continues to be a significant player, bolstered by the ubiquity of smartphones (projected to reach $30 billion in 2023).
“Brands are also increasingly investing resources to leverage mobile commerce and create engaging marketplaces that cater to the growing number of consumers who prefer shopping on a mobile device,” said Klett and Ogar.
Social commerce is another trend gaining traction in Australia and the APAC region.
“Social media platforms provide consumers with a convenient avenue to discover, research, and purchase within their social networks. Social commerce is reshaping the retail landscape, offering shopping experiences that empower consumers to explore and engage with products,” they said.
“We're also witnessing a surge in cross-border trade, providing Australian consumers access to an extensive range of products from international markets. Industry research shows the proportion of Australian brands looking to expand their online presence overseas nearly doubled in just a year, from 20% in 2022 to 39% now.
“The adoption of an omnichannel approach by retailers is another trend worth noting. By integrating their online and offline presences and core systems, businesses can provide a seamless, unified shopping experience for customers.
“Finally, the impact of AI and automation can't be overstated. These emerging technologies have immense potential in enhancing the digital commerce experience, personalising, even individualising, recommendations and bridging the gap between physical and digital retail.”
Have something to say on this? Share your views in the comments section below. Or if you have a news story or tip-off, drop us a line at adnews@yaffa.com.au
Sign up to the AdNews newsletter, like us on Facebook or follow us on Twitter for breaking stories and campaigns throughout the day.