Wednesday, November 10, 2010

PayPal eCommerce Secure Insight Research

This morning Jodie, Mike, Carmen and I joined 200+ people involved in the Australian eCommerce space at the Westin Hotel in Sydney to see the presentation of PayPal's latest research into the eCommerce market in Australia. There were a lot of fascinating insights into the state of eCommerce in Australia, and some great actionable items came out of it for us. I thought I'd share the key pieces of information we took away from the event.

Firstly, Steven Noble from Forrester Research presented the findings from their study into the challenges and opportunities facing Australian business in the online retail space, here's what I took away from Steven's presentation:

  • Online retail in Australia is booming
  • Growth this year will be 11.8% and the market is forecast to grow at a similar rate over the next 3 years.
  • We will spend $26.9 billion online in Australia this year. That's the equivalent of $1200 for every one of the 22 million people living in Australia.
  • 85% of this figure is spent with Australia businesses, only 15% goes to foreign businesses.
  • The largest two categories within the $26.9b are Travel at $6.5b (this includes purchasing airline tickets online etc.) and Grocery at $5b (this includes online purchases of alcohol).
  • Sales in the category that Shoes of Prey sits in, apparel, accessories and footwear will total $1.4b this year.

Forrester surveyed 114 online retail professionals and found that they rate the following as key challenges for them in the space:

  • Competition from low cost online retailers
  • Recruiting skilled eCommerce professionals. Interestingly large business found this to be a big challenge with 52% rating this is a key challenge while only 11% of small businesses said this was an issue.
  • Price & performance of marketing. 31% of pure play online retailers said this was a key challenge while only 17% of multi-channel retailers rated this as an issue. Clearly multi-channel retailers are benefitting from the marketing and brand recognition they get from working across multiple channels.
  • Delivery. The cost of delivery is a huge issue for retailers, as is reliability of delivery (as we've discussed on this blog previously) and the lack of support for shipping unusually sized products.

Seonaid Chappell from The Leading Edge then presented their research into how consumers are shopping online. My key takeaways from her presentation were:

  • 53% of Australians have purchased online in the last 12 months.
  • Of this 53%, 23% have purchased from Australian retailers online only, 25% have purchased from both Australian and foreign retailers and only 6% have purchased from overseas retailers only.
  • The demographic breakdown of who is shopping online almost perfectly matches the Australian population. There's a slight skew towards people in rural areas and the 18-29 category both shopping online a little more, but the skew isn't a significant one, all age groups are shopping online.
  • The main reason consumers give for shopping online from Australia sites are:
    • Convenience
    • Value
    • Confidence around delivery and returns (compared with shopping from overseas sites)
  • The main reason consumers gave for shopping online from foreign sites was that the products they want aren't available from Australia retailers.
  • Only 5% of consumers said the exchange rate encouraged them to purchase overseas! (The survey was conducted in May/June this year, before the AUD his parity with the USD, but this figure is much lower than I expected).

Finally the barriers consumers gave to shopping online are:

  • Concern
    • No protection if something goes wrong in the purchase or delivery process. We took an action item out of this, we plan to add our phone number to all the pages in our shopping cart, and potentially other pages on our website. If consumers see the number, even if they don't want to contact us now at least by seeing the number they might feel more confident that they can contact us easily if there's an issue.
    • Fraud - our trust badges are hopefully helping alleviate this concern.
  • Delivery - both cost and time. This has us contemplating whether we should be offering free shipping.
  • Interaction - As we're well aware consumers ideally want to be able to see, touch and interact with products before they purchase.
  • Cost - often buying online isn't cheaper than shopping offline.

And lastly PayPal's Australian managing director Frerk-Malte Feller shared some insights into the growth within the mobile eCommerce space:

Mobile eCommerce sales:

  • 2009 $2.79m
  • 2010 $35m (year to date)
While these are still relatively low figures compared to the total of $26.9b in eCommerce sales we'll do in Australia this year, mobile is a rapidly growing space and where we'll see a lot of innovation of the coming years.

If all of this exciting data interests you, PayPal are conducting a webinar to present the information tomorrow (Thursday) from 5pm-6pm Sydney time. David Koch is hosting the webinar, Steven Noble and Seonaid Chappell are presenting the findings from their research (which are a lot more detailed than what I took from it above) and while this may be less exciting for you, I'm on the panel discussing Shoes of Prey and the lessons we've learnt over our first 13 months of operation. Here's the link to view the webcast tomorrow:


  1. Michael,

    Any update on Website Payments Pro coming to Paypal Australia?

  2. Thanks guys, lots of interesting take outs there.
    Freight cost & reliability is still such a hurdle.

    Good interview with Kohler on Qantas radio.

  3. Hi Mike, PayPal have said the AU version of Website Payments Pro will be live in AU by Q2 2011. The product name will be Website Payments Pro Hosted Solution. They're beta testing an iFrame version of the product in Australia shortly, but that version will only be tested with some of their customers and not available to the public. (We've been speaking with PayPal and are planning to test it for Shoes of Prey).

    Scott - it was quite exciting to be interviewed by Alan Kohler, he'd have to be my favourite business journalist. I haven't heard the interview yet, hope it came out alright!

  4. Sounds great Michael.



  5. Hi crew - anyone know of a link to a stream of that webinar? we missed it.


  6. EDIT: DOH - Found it! - thanks ;)