The second annual 24 hours of Click Frenzy kicks off tomorrow and looks set to attract a record number of transactions. Not quite the madness of Cyber Monday in the US, but the response has been enough to begin to shake the cobwebs off more than a few bricks and mortar stores as they realised the opportunity in Australia was more significant than they might have realised pre 2012 (as, some might say, did the technical platform providers underpinning its rather inauspicious launch).
And given the warning given by GroupM’s digital boss Rob Norman at an IAB event last week that Amazon would crush local retailers when it finally launched on these shores, it looks like it could be a case of now or never for Australian retailers to get online. As most of us in the industry know, Australia has one of the highest proportions of online advertising in the world, a high retail sector spend but a correspondingly smaller percentage of online sales.
The National Australia Bank (NAB) Online Retail Index estimates that it is 6.6% of spending at traditional retail stores. But as Australian retailers have found out at their peril, it has been a case of ‘if you build it, it will come’ as the influx of overseas online retailers, like Asos and Amazon have proven there is demand for it – its growth is far outpacing that of traditional retail, with the same NAB index noting a growth rate from January 2013 to January 2014 was close to 13%.
We are also seeing a changing consumer pathway to a purchase. Nielsen reported in June this year that 6 out of 10 Australians are now taking a multi-channel path to purchase, meaning that today’s shoppers are armed with smartphones and tablets and will price comparison and browse before even (if at all) venturing into a store. This isn’t news to those of us in the digital media industry that are at the front line of trying to navigate shifting consumer behaviour across multiple channels and platforms. We know that the path is sometimes simultaneous, sometimes linear and sometimes erratic – but critically, it is important to go where your customers go. Lag behind at your peril or someone else will snap them up.
At Exponential we recently used our e-X platform that uses proprietary technology to categorise an audience’s online interests and intentions into granular detail, to look at the last 12 months of Australian online retail activity. We looked at the actual behaviour of 3.1 million Australians across our network to find out just who is researching and buying online and what sort of things they are buying. We conducted the research to show our retail clients what the key interests of their potential customers are in order for them to connect with them more effectively, but the top line findings are pertinent for all Australian retailers – they may be surprised at the breadth and depth of their potential audience.
1. Baby Boomers are leading the charge. If there is anyone left who thinks that online retail is a new fandangle for the younger generation then it’s time to wake up. When we look at the primary male/female demographic across the whole year the male primary audience was affluent, young grandfathers who are buying children’s movies, men’s clothing, comics, collectibles and car electronics. Young, affluent grandmothers were the secondary audience, buying underwear, clothes, children’s books, cosmetics and perfume. This audience segment has money and grandchildren – and they are using it to spoil their grandkids rotten!
2. For everything there is a season. Consumer electronics peaks in December which was obviously driven by Christmas gifts and sales (gone are the days where kids get a Barbie or Ken doll). Furniture buying peaks in January, March and July. New year, new start? Young, single women are spending up big on Pet supplies in January and April – everyone loves a Chihuahua in boots right? And unsurprisingly women are driving the peak of the apparel and accessories category, with significant jumps in September and December. In fact, whilst most audience segments spent on others, when it comes to fashion and accessories, women spend on themselves and themselves only.
3. Beauty never takes a break. We look after our health and appearance all year round so it’s no surprise that health and beauty products fly off the (online) shelves all year round. Out of all of the categories we looked at, this was the one constant with its primary audience of single young females. This is potentially worrying news for Australian retailers in the sector particularly with the opening of Sephora in Sydney’s Westfield in December. Although the physical store comes first, an online presence here is, according to their official Facebook page, “certainly in the cards”.
Almost every age, sex, income and interest segmentation you might think of is spending an increasing amount of time researching and making online purchases. This means the opportunities for brands to connect with an engaged and interested audience are enormous – particularly when combined with an ability to find out what other interests and preferences they are displaying. Smart brands and smart retailers should be leveraging the cross-channel solutions out there to drive sales and brand awareness forward. Act quickly before someone else does.
Alice Donaldson
Exponential
Insights Manger, APAC and South Africa