Multinational online retailers eBay Inc and Amazon.com Inc were the largest two players in the Australia internet retailing market during 2012. eBay Inc held a 22% value share, while Amazon.com Inc accounted for 19% of sales.
Internet retailing has become a key focus for existing bricks-and-mortar businesses, as they are under pressure to meet the change in how consumers shop. Traditional bricks-and-mortar stores like David Jones and Myer were badly hit by the changing consumer habit of searching for value and moving away from store-based shopping. In response, they have set up strategies to provide a multichannel experience for shoppers, allowing consumers to browse and purchase in-store or online. They have provided an extensive range of products on their sites to complement their store-based retailing operations. For Australian Pharmaceuticals Industries (API) and David Jones Ltd, the online platform has generated a higher spend per shop than the bricks-and-mortar stores. API claims that its basket size is on average twice as big from an online sale than for a store-based sale, while David Jones reports that the average online sale was three times the size of the average store-based transaction in 2012.
Internet retailing is expected to grow strongly in the forecast period, with a constant value CAGR of 13% between 2012 and 2017. This channel is predicted to see the fastest growth in retailing. Factors driving this growth will include the strong Australian dollar, which encourages online shopping via offshore sites, growing internet penetration and faster speed of accessing the internet. Consumers are more confident transacting online, as their concerns regarding security diminish. The internet retailing channel appeals to various demographics, such as younger internet-savvy consumers, who enjoy the range of products online, including offerings from international sites, as well as older consumer groups who enjoy the ease of transactions and home delivery.
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