Online retail outlook for
2013:
What is driving the growth of
online shopping?
Online Retail Logistics
Conference
November...
What is driving online shopping?
“In 2013 Australian
retailers are no longer
shielded by the tyranny
of distance ...
Customers can now
buy anything,
anywhe...
So how have we got here….

Mobile device technology
2010

Michael Aldrich
invents process of
online transaction
processing...
…and customers have rapidly embraced the new
technologies…..
20

47,000

New victims of
identity theft

App downloads

204...
Globally - online retailing continues to grow…

2011
5.5%

2012
6.3%

2013e

7.0%

5.1%

5.9%

7.0%

7.5%

7.3%

8.0%

9.0...
In Australia - online retailing continues to grow…

2013
estimates

7.0%
Online expenditure as a
percentage if retail sale...
So what has driven this rapid growth of online
retailing?

Customer
value
proposition

Technology

Customer

Infrastructur...
Structural industry changes have occurred & new
local and global competitors have emerged…..
New payment models

Property
...
… manufacturers have now rapidly commenced to
enter the retail sector

10
Manufacturers and retailers are using latest digital
walls and mobile to drive online in train stations

11
Global Pureplays have now entered the retail
sector by opening short term stores…
eBay has opened ‘The eBay Inspiration
Sh...
And then there are the two big disruptors –
Amazon and eBay

13
“New globally aware,
digitally driven
customers are
emerging in their
millions. Traditional
retail will have to adapt
fast...
Connected customers are using multiple channels &
new technologies to drive online retail growth…
Shops
globally

More
inf...
… strong customer value propositions which are
continually changing are driving and retaining new
customers to online…

Pe...
… customer multi screening is driving greater
customer engagement and online sales…
Sequential usage

Simultaneous usage

...
…. mobile & emerging technologies are providing
customers the service, price & efficiency platform for
growth
Mobile devic...
…customer advocacy via social media has driven
online growth

62%
If adults worldwide now use
social media

53.8%
Of the A...
.. and in Australia, the infrastructure is largely in
place for today but is required for growing demand…
Global supply ch...
…and in 2013, Australian customers have
embraced mobile technology and more to come…

73%

49%

Estimated smartphone
penet...
Where will future growth be driven
from
….and growth will continue in online retail..
2012

2013e

2014e

2015e

2016e

2017e

USA

6.5%

7.2%

8.0%

8.9%

9.7%

...
Future growth will come from these core drivers…
Competition from Pureplays, retailers & manufacturers; local and
global
A...
…Online growth will be driven around a more
structural change, a complex retail model and
technology…
New payment models

...
Stores and store estates will be reset..

26
Future growth will come from…
Centralised customer profiles

Wearable
technologies

Curated offers

Techniques

Subscripti...
Customer and customer advocacy and referrals will
be a key driver…

80%
Of customers share their online
shopping experienc...
Future growth will come from..

Technology
 Mobile devices
 Infrastructure

 Payments
 Integration
 Analytics
 Inves...
Growth in the future will come from…

Delivery
 Delivery costs
 Delivery options

 Time expectations
 Communications
...
Thank you
Questions?
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Stuart Harker,PricewaterhouseCoopers Australia - Online retail outlook for 2013: what is driving the growth of online shopping?

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Stuart Harker, Global Retail & Consumer Advisory Partner, PricewaterhouseCoopers Australia presented this at Online Retail Logistics 2013. The conference focused on ways to create efficient supply chains to support the increase in online shopping.

For more information, visit http://www.informa.com.au/onlineretaillogistics13

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Stuart Harker,PricewaterhouseCoopers Australia - Online retail outlook for 2013: what is driving the growth of online shopping?

  1. 1. Online retail outlook for 2013: What is driving the growth of online shopping? Online Retail Logistics Conference November 2013 Stuart Harker Global Retail & Consumer Advisory Leader
  2. 2. What is driving online shopping?
  3. 3. “In 2013 Australian retailers are no longer shielded by the tyranny of distance ... Customers can now buy anything, anywhere, any time and on any device” 3
  4. 4. So how have we got here…. Mobile device technology 2010 Michael Aldrich invents process of online transaction processing 1979 1990 1991 First B2B transaction Social commerce emerges Nexus web browser Internet commercialised 1994 •Netscape released Navigator browser •Pizza Hut started online ordering •Cars, bikes and adult content started selling on the internet 2007 iTunes Store launched Zappos – first online only store Dot Com boom 1981 iPad launched 1998 1995 iPhone launched 2003 2005 1999 PayPal launches Ebay, Amazon & Dell founded 4
  5. 5. …and customers have rapidly embraced the new technologies….. 20 47,000 New victims of identity theft App downloads 204M Emails sent 61,141 Hours of music 20 million $83,000 Photo views In sales 320+ New Twitter accounts 135 Botnet infections 1,300 New mobile users 6 New Wikipedia articles published 3,000 Photo uploads 100,000 New tweets 100+ New Linkedin accounts 277,000 6 million Logins …in any one minute… Facebook views 2+ million Search queries 30 1.3 million Hours of video Video views uploaded 5 Source: http://www.hongkiat.com/blog/what-happens-in-an-internet-minute-infographic/
  6. 6. Globally - online retailing continues to grow… 2011 5.5% 2012 6.3% 2013e 7.0% 5.1% 5.9% 7.0% 7.5% 7.3% 8.0% 9.0% 10.7% 11.7% Online expenditure as a percentage of retail sales Source: Frost & Sullivan Australian and New Zealand Online Shopping Market 2013 Verdict: How the UK will shop: 2013 Forrester research 6
  7. 7. In Australia - online retailing continues to grow… 2013 estimates 7.0% Online expenditure as a percentage if retail sales (up from 6.3% in 2012) $18b 30% Expected online shopping expenditure in 2013 13.1% Expected Compound Annual Growth Rate by 2016 Australian online shoppers have purchased goods over the last 12 months via smart phones 19% Australian online shoppers have purchased goods over the last 12 months through a tablet device 79% Online shoppers have purchased from offshore retailers 7 Source: Frost & Sullivan Australian and New Zealand Online Shopping Market 2013
  8. 8. So what has driven this rapid growth of online retailing? Customer value proposition Technology Customer Infrastructure Competitors 8
  9. 9. Structural industry changes have occurred & new local and global competitors have emerged….. New payment models Property Owner Manufacturer Manufacturers direct to Customer Pure Plays direct to Customer Retailer Customer Retailer Global Retailers & Pure Plays 9
  10. 10. … manufacturers have now rapidly commenced to enter the retail sector 10
  11. 11. Manufacturers and retailers are using latest digital walls and mobile to drive online in train stations 11
  12. 12. Global Pureplays have now entered the retail sector by opening short term stores… eBay has opened ‘The eBay Inspiration Shop’ in New York which allows customers to browse and buy 24/7. eBay opened a temporary physical store in the West End of London in December for just five days. 12
  13. 13. And then there are the two big disruptors – Amazon and eBay 13
  14. 14. “New globally aware, digitally driven customers are emerging in their millions. Traditional retail will have to adapt fast to exploit this opportunity” Ian Cheshire, Group CEO, Kingfisher UK 14
  15. 15. Connected customers are using multiple channels & new technologies to drive online retail growth… Shops globally More informed Shops anytime, anywhere Connected & empowered Time poor Difficult to engage Environmentally aware 15
  16. 16. … strong customer value propositions which are continually changing are driving and retaining new customers to online… Personalised service Value Range Search Convenience Acquisition Marketing & promotions Global supply chain Global price transparency 16
  17. 17. … customer multi screening is driving greater customer engagement and online sales… Sequential usage Simultaneous usage Moving from one device to another at different times to accomplish a task Using more than one device at the same time for either a related or unrelated activity 17
  18. 18. …. mobile & emerging technologies are providing customers the service, price & efficiency platform for growth Mobile devices – smartphones and tablets Rapidly evolving technology Rapid growth of apps Payment solutions Analytics Integration of technology 18
  19. 19. …customer advocacy via social media has driven online growth 62% If adults worldwide now use social media 53.8% Of the Australian population are on As at September 2013 2.1m 3.4m Users on Users on 4.2m Where once customers locked up their information tightly, today they are happy to share these details with select family, friends, colleagues and acquaintances through these networks Users on Source: Pring, C., ’99 New Social Media Stats for 2012’, The social skinny, 10 May 2012 Murton, D., ‘Australian Internet and Social Media Statistics (September 2013)’, Australia’s Content Marketing Blog, 30 September 2013 19
  20. 20. .. and in Australia, the infrastructure is largely in place for today but is required for growing demand… Global supply chain Internet and broadband Speed Technological infrastructure Efficient and Convenient Supply Chain Security, privacy and fraud 20
  21. 21. …and in 2013, Australian customers have embraced mobile technology and more to come… 73% 49% Estimated smartphone penetration in 2013 Estimated tablet penetration in 2013 93% 80% Estimated smartphone penetration in 2018 Estimated tablet penetration in 2018 19.6m Subscribers with mobile internet access connections in 2013 And globally... $235b Worth of mobile transactions in 2013 $721b Estimated worth of mobile transactions in 2017 21 Source: ABS, ‘Mobile Handset Subscribers’, Frost & Sullivan Press Release
  22. 22. Where will future growth be driven from
  23. 23. ….and growth will continue in online retail.. 2012 2013e 2014e 2015e 2016e 2017e USA 6.5% 7.2% 8.0% 8.9% 9.7% 10.6% China 4.1% 5.3% 6.7% 8.1% 8.8% 9.6% Japan 3.96% 4.3% 4.7% 5.1% 5.4% 5.8% Germany 5.0% 5.6% 6.2% 6.8% 7.3% 7.8% UK 9.6% 10.3% 10.8% 11.4% 12.0% 12.3% India 0.4% 0.5% 0.5% 0.6% 0.6% 0.7% France 5.0% 5.3% 5.6% 5.9% 6.1% 6.3% Australia 6.3% 7.0% 7.7% 8.5% 9.0% 9.8% South Korea 12.7% 13.4% 13.8% 14.1% 14.2% 14.1% 13.1% Expected Compound Annual Growth Rate by 2016 Source: Frost & Sullivan Australian and New Zealand Online Shopping Market 2013 Citi research, Euromonitor $2.0tn Expected global ecommerce sales in 2016 23
  24. 24. Future growth will come from these core drivers… Competition from Pureplays, retailers & manufacturers; local and global Amazon and Ebay growth will continue across new categories & channels China and Asia Pacific growth will be dramatic Greater Supply chain efficiency and options; click and collect, returns, lockers etc Integration of technology and process across the organisation to drive service, value and CODB Mobile device growth – tablet and smart phone Curating personalised experiences for shoppers, finding niche markets for highly specialised goods for customers Analytics & big data will be core to success via customer understanding, efficiency and personalisation of offers Stores will drive growth; Click and collect etc 24
  25. 25. …Online growth will be driven around a more structural change, a complex retail model and technology… New payment models Manufacturer Mobile Social media Apps Property Owner Ever changing Customer Manufacturers direct to Customer In store technology Pure Plays direct to Customer Global price transparency Global supply chain Retailer Retailer Global Retailers & Pure Plays 25
  26. 26. Stores and store estates will be reset.. 26
  27. 27. Future growth will come from… Centralised customer profiles Wearable technologies Curated offers Techniques Subscriptions Multi screen 27
  28. 28. Customer and customer advocacy and referrals will be a key driver… 80% Of customers share their online shopping experience to other customers 89% Of customers search for information before making a purchase 92% Of customers trust earned media (e.g. recommendations from friends and family) above all other forms of advertising 58% of global online consumers trust messages on company websites. 28
  29. 29. Future growth will come from.. Technology  Mobile devices  Infrastructure  Payments  Integration  Analytics  Investment 29
  30. 30. Growth in the future will come from… Delivery  Delivery costs  Delivery options  Time expectations  Communications  Tracking  Returns  Kiosks  Returns  Lockers  Black stores  Technology/Integration 30
  31. 31. Thank you Questions?
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