2017 Online Shopping & Customer Expectations – We Need to Improve Australia’s Retail Experience

Online shopping is a hot topic for Australian businesses this year.

We are currently in a unique but vulnerable position – with sustained economic growth since 1991 –
– our economy is in a state of complacent prosperity (which are my favourite new buzzwords by the way).

Source: PWC

The critical visionary point

Very soon, the businesses that are driving this growth will reach a critical visionary point and either decline and decay, or require reinventing to achieve new growth and revenue. What has always worked, will not continue to always work, and as the global leaders shift their strategy to maintain their success, those who fail to do so will be left behind. With Amazon on its way down under, retail is being pushed toward this critical point faster than most, and the traditional retail juggernauts will be left in the wake of change wondering where their customers and profitability went, unless they can pre-emptively adapt.

Consumer journeys are more evolved and complex than ever before, you don’t walk into a shop and ask the shop assistant for their advice on which headphones you should buy. You see them on Instagram, talk to a friend on messenger, read reviews, check whirlpool, compare prices and buy your ‘Beats by Dre’ online. Probably from a retailer you’ve never heard of, hoping that they turn up and aren’t ‘deats by NANI’.

Customer Centric

Now more than ever, consumer experience holds sway over purchase decisions, and it’s the companies that are shifting their business functions to be customer centric, that are leveraging this new consumer behaviour, to drive growth.

Consumers aren’t just comparing you to your industry peers anymore. I can book an Uber from my phone that arrives at my current location in 3 minutes and takes me where I need to go. But I can’t have a bookcase from IKEA delivered to my house without going to the store first and paying for it in person (apparently click and collect/delivery was in the works and maybe coming late next year). Our expectations are now based on our best experience ever, not just our best experience with a company and its competitors.

Let’s drop some stats:

  • 63% of consumers expect a business to use purchase history to provide personalised experiences
  • 66% of shoppers conduct online research before making a purchase
  • 78% of consumers spent more time researching a brand or product online than in store
  • 50% of internet users looked for a video related to a product or service before visiting a store
  • 91% of smartphone owners purchased or planned to purchase something after seeing a relevant ad
  • For every second of delay in mobile page load, conversions fall by up to 20%
  • From 1 to 7 seconds of page load, bounce rate doubles

This highlights more than ever the need to understand the customer journey, and actively facilitate a frictionless experience for the customers undertaking it. Let’s look at the last 2 stats in particular. Site speed continues to be one of the most impactful friction points in the consumer journey across all verticals, and particularly in eCommerce.

So how long does it take retail sites to load?

In the US, top retailers like Walmart average a 5.1 second page load speed, with Amazon leading the charge at 2.8 seconds. In Australia? More than double. With top retailers averaging a 10.9 second load time, and some more than 20 seconds, Australian retailers are not equipped to handle consumer expectations. Site speed is so important to online retailers, that Amazon has measured a revenue increase of 1% for every 100ms cut off their download times.

Australian retailers need to shift their focus to the customers they are trying to reach, and the way these customers want to interact. US organisations that leverage customer behavioural insights report an 85% increase in sales growth and a 25% increase in gross margin. These organisations are still focussed on profits, but understand that a low CPA does not necessarily equal high profitability. Actually understanding your best customers and their requirements, and finding similar consumers, leads to higher value & repeated purchases.

Retail isn’t Dead?

Contrary to the articles you’ve seen all over the internet, offline retail is not dead (in Australia at least). In the Christmas period of 2016, footfall to stores did drop by 7.3% compared to 2015, but 2017 in-store retail grew 3.8%. While paling in comparison to the 17.1% growth in eCommerce, consumers are still making purchases in store and the value of these purchases is increasing.

The evolution of the non-line shopper, that sees no distinction between brick and mortar and online offerings, requires retailers to understand that their business silos are not the consumers. Consumers expect that their interaction with a company, regardless of the medium, is consistent and frictionless. As eCommerce giants like Amazon continue to shape consumer expectations, this line will only continue to blur, and it’s only a matter of time before traditional retailers can no longer compete without adapting their processes.

Christmas 2017

75% of Australian consumers were undecided where they would shop in the Christmas period last year, and with 47% of search queries in December occurring on mobile, consumers are looking for the best products at the best prices, on the go and regardless of who the offering is from. Consumers are thinking less about where to purchase their goods, and more about what they want to purchase. For every 1 search for a retailer in apparel e.g. “David Jones”, there are 3 product searches “ugg boots”, “swimmers”, “dresses”. Across online retail, 52% of mobile clicks are going to paid ads (39% to shopping ads, 13% ETAs), with the rest going to organic. On desktop, it’s 58%. For retailers to compete, they need to be available wherever a customer is looking and be ready to offer a fast, frictionless experience that will promote purchase decisions and an ongoing profitable relationship over the lifetime of the consumer.

As digital agencies, we are uniquely positioned to help our clients succeed in this space, and share in the glorious online shopping growth. So dust off your shopping feeds, and dig up your eComm revenue pixels, because Winter might not be coming, but Christmas is!

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