eCommerce
SecureInsight
Australia
November 2010
PayPal Australia Pty Limited ABN 93 111 195 389 (AFSL 304962). Any general financial product advice provided here has not ...
Lorem ipsum dolor
sit amet, consectetur
adipiscing elit. Nullam
tempor, mauris volutpat
sodales dictum, sem lectus
aliquam...
eCommerce Secure Insight - Page 2
EXECUTIVE SUMMARY
A
ustralians are now seeing the true benefits of online retail. Over t...
Lorem ipsum dolor sit amet, consectetur adipiscing elit.
Nullam tempor, mauris volutpat sodales dictum, sem
lectus aliquam...
eCommerce Secure Insight - Page
eCommerce Secure Insight - Page
The Australian eCommerce landscape has
evolved rapidly within the last twelve months.
Smal...
eCommerce Secure Insight - Page 6
Forrester consulting - The business of Australian online retail
Table Of Contents
Execut...
INTRODUCTION
eCommerce Secure Insight - Page 7
Forrester consulting - The business of Australian online retail
Key Finding...
eCommerce Secure Insight - Page 8
Forrester consulting - The business of Australian online retail
Source:Forrester Researc...
INTRODUCTION
eCommerce Secure Insight - Page 9
Many Australian merchants are growing strongly, in line
with the overall su...
eCommerce Secure Insight - Page 10
Forrester consulting - The business of Australian online retail
compete with the others...
INTRODUCTION
eCommerce Secure Insight - Page 11
Forrester consulting - The business of Australian online retail
Source:For...
Forrester consulting - The business of Australian online retail
eCommerce Secure Insight - Page 12
Source:Forrester Resear...
INTRODUCTION Forrester consulting - The business of Australian online retail
eCommerce Secure Insight - Page 13
KEY RECOMM...
Lorem ipsum dolor
sit amet, consectetur
adipiscing elit. Nullam
tempor, mauris volutpat
sodales dictum, sem lectus
aliquam...
eCommerce Secure Insight - Page 16
the leading edge research
Online shopping in Australia is booming and the demand from c...
INTRODUCTION
eCommerce Secure Insight - Page 17
“When looking at overseas drivers,
we found that these differ dramatically...
eCommerce Secure Insight - Page 18
Lorem ipsum dolor
sit amet, consectetur
adipiscing elit. Nullam
tempor, mauris volutpat
sodales dictum, sem lectus
aliquam...
eCommerce Secure Insight - Page 20
STAYING SAFE ONLINE
Understanding online crime
For every crime we see online there is a...
INTRODUCTION
eCommerce Secure Insight - Page 21
STAYING SAFE ONLINE
The consumer response
Australians are amongst the most...
eCommerce Secure Insight - Page 22
because of the margin most businesses operate on: if you
have a 25% margin you need 4 l...
INTRODUCTION
if reported. One individual act may be spread across
many jurisdictions and be replayed against thousands
of ...
eCommerce Secure Insight - Page 24
PAYPAL OVERVIEW
What is PayPal?
PayPal is a secure payments system that lets people buy online without sharing their perso...
E Commerce Secure Insight Report Final
E Commerce Secure Insight Report Final
Upcoming SlideShare
Loading in...5
×

E Commerce Secure Insight Report Final

1,053

Published on

0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total Views
1,053
On Slideshare
0
From Embeds
0
Number of Embeds
0
Actions
Shares
0
Downloads
26
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide

Transcript of "E Commerce Secure Insight Report Final"

  1. 1. eCommerce SecureInsight Australia November 2010
  2. 2. PayPal Australia Pty Limited ABN 93 111 195 389 (AFSL 304962). Any general financial product advice provided here has not taken into account your objectives, financial situations or needs. Before deciding to sign-up for or use the PayPal service you should consider the Product Disclosure Statement, available at www.paypal.com.au
  3. 3. Lorem ipsum dolor sit amet, consectetur adipiscing elit. Nullam tempor, mauris volutpat sodales dictum, sem lectus aliquam felis, id venenatis nisi erat eu nisl. Curabitur auctor turpis in enim auctor at varius ipsum sollicitudin. Suspendisse at velit nisi, sit amet vehicula lacus. Nam sit amet malesuada dolor. Donec ultricies, sapien nec pellentesque vehicula, justo nibh mattis velit, et volutpat felis nibh id dolor. Curabitur id elit metus. Phasellus at lacus eros, eu blandit arcu. Maecenas sit amet nunc at turpis pulvinar porttitor. Sed euismod fringilla diam ut ullamcorper. Maecenas quis nibh lacus. Integer faucibus odio iaculis eros aliquet in venenatis nulla dignissim. Vestibulum sed elit dolor, id pretium eros. Mauris blandit venenatis consectetur. Etiam at leo velit, id ultricies mauris. Duis mattis lacinia odio, pulvinar dictum mauris dapibus et. Vestibulum urna nunc, condimentum non consequat laoreet, consectetur sit amet augue. Nullam cursus, sem sit amet euismod lobortis, augue nulla ultrices arcu, non sodales lacus metus adipiscing libero. Integer elementum, diam nec egestas ultrices, lacus ipsum posuere mauris, ut gravida sapien mauris commodo purus. Phasellus euismod, nibh vitae tincidunt ornare, nisi eros dictum magna, nec fringilla nibh ligula eget tortor. In viverra quam eget sem aliquet hendrerit in eget dui. Praesent convallis mattis nunc, adipiscing ullamcorper metus varius ac. Mauris rhoncus, risus ut tristique semper, eros tortor pellentesque ligula, in ullamcorper velit erat ut eros. Etiam et velit orci. Proin mollis laoreet nunc vel ullamcorper. Ut venenatis eleifend nulla, nec feugiat quam ultrices faucibus. Cras pharetra suscipit sagittis. Phasellus dui magna, porttitor at accumsan eu, faucibus ac enim. Mauris porta, nisi vel faucibus aliquet, lacus velit ultricies nisi, eu ultricies sapien ipsum quis ipsum. Aliquam tellus neque, ultrices quis posuere sit amet, imperdiet et lorem. Phasellus eu justo sed risus imperdiet condimentum. Aenean fermentum augue condimentum tellus auctor ornare. Curabitur dolor dolor, laoreet eu iaculis in, varius id arcu. Aliquam lacinia enim in libero viverra ultrices. Curabitur at mollis dolor. Fusce condimentum ipsum eu dui viverra bibendum. Proin sollicitudin, tortor ut sollicitudin interdum, leo augue cursus nisi, at tempor nulla eros sit amet neque. Integer dui neque, laoreet eget gravida nec, consectetur quis ligula. Curabitur condimentum nisi nec odio sollicitudin id blandit lacus mollis. Nulla ac accumsan arcu. Quisque id mi nisl, vitae dictum nunc. Nullam id mi ut nisi laoreet semper. Mauris sodales risus sit amet nisl commodo id pellentesque lacus ullamcorper. Praesent ultricies pharetra enim, eu venenatis nisi vehicula id. Curabitur facilisis, felis vel mollis rutrum, nisi nibh commodo nibh, a cursus augue nibh vel nibh. Curabitur pretium lorem at mauris aliquam tempor hendrerit nisi tristique. Suspendisse mollis, tortor in porttitor pretium, ipsum sem condimentum libero, eget posuere arcu nibh gravida mi. Pellentesque et est ligula. Curabitur dignissim convallis ante a sodales. Nullam congue, lorem luctus mollis blandit, dui mi aliquet turpis, non pharetra enim mi id enim. Quisque nisl augue, aliquet sit amet dignissim id, varius eu leo. Curabitur ullamcorper, est non mollis auctor, neque sem facilisis lacus, vitae semper ante erat non arcu. Phasellus adipiscing orci eget ligula malesuada nec interdum leo semper. Vivamus dignissim fermentum nisl, ultricies suscipit diam vestibulum at. Nam sed faucibus lacus. Donec a augue diam. Proin sit amet libero ante, ut adipiscing dui. Suspendisse nec felis leo, non tempus dolor. Integer cursus mi quis mi pulvinar laoreet. Nullam ipsum orci, ullamcorper eu elementum vel, mattis ac velit. Nulla nec neque a est fermentum adipiscing tempor in lacus. Fusce scelerisque arcu in nulla viverra euismod. In gravida felis quis diam porta dapibus. Ut fermentum sollicitudin elementum. Suspendisse eu ligula tortor, ac gravida elit. In mattis ultrices velit bibendum tristique. Vivamus porta nunc ac nunc gravida hendrerit condimentum in magna. Sed blandit lacinia semper. Maecenas purus nulla, condimentum vel rhoncus viverra, volutpat vitae mi. Praesent ante risus, ullamcorper id luctus at, faucibus quis nibh. Donec vestibulum, ipsum molestie fringilla vulputate, arcu sem scelerisque erat, eget tincidunt nibh arcu in nibh. Maecenas pretium, turpis ac venenatis tincidunt, eros nisi pellentesque massa, non imperdiet erat felis in odio. Lorem ipsum dolor sit amet, consectetur adipiscing elit. Nullam tempor, mauris volutpat sodales dictum, sem lectus aliquam felis, id venenatis nisi erat eu nisl. Curabitur auctor turpis in enim auctor at varius ipsum sollicitudin. Suspendisse at velit nisi, sit amet vehicula lacus. Nam sit amet malesuada eCommerce Secure Insight - Page INTRODUCTION executive summary. What does the online future look like for Australian consumers and retailers? The Australian eCommerce industry is experiencing tremendous growth as retailers and consumers embrace the benefits of transacting online. At PayPal, we enable these transactions and play a critical role in facilitating eCommerce amongst Australian businesses and consumers. Indeed, transactions for our 34,000 registered businesses have grown 19 per cent year on year and 3.5 million Australians now choose to carry out their transactions online with PayPal. Enabling eCommerce for businesses and consumers is central to PayPal’s proposition. As the safest, most secure and convenient way to pay online, it is in our interests to take an active role to help grow and develop this booming industry. PayPal’s research report, ‘eCommerce: Secure Insight’, developed in conjunction with Forrester Research and The Leading Edge, provides unprecedented insight into the current state of the ever growing Australian eCommerce market, set to reach AU$36.8 billion by 2013, up from a forecasted figure for calendar year 2010 of AU$26.86 billion. This significant growth will be driven predominantly by consumer adoption and better customer experiences. Frerk-Malte Feller Managing Director, PayPal Australia
  4. 4. eCommerce Secure Insight - Page 2 EXECUTIVE SUMMARY A ustralians are now seeing the true benefits of online retail. Over the last year a number of major retailers have entered the online space, and retailers are beginning to respond to consumer demand by offering broader ranges online, along with transparent transaction, shipping and return policies. Another key driver of this growth is consumer adoption of new channels and technologies. Consumers are no longer satisfied with a separate ‘in-store’ and ‘online’ retail experience, they want to be able to buy what they want, from where they want, how they want. This calls for a truly multi-channel approach from retailers, providing the ultimate consumer experience. With the explosion of web enabled mobile devices, PayPal Australia has seen a 12 fold increase in mobile payment volumes over the last year, increasing from a value of $2.7 million in 2009 to $35 million to date in 2010. This trend is just emerging, we predict that this number will continue to grow at such rapid pace as retailers respond to consumer demand and offer consumers an innovative customer experience. One of the most gratifying findings from our research is that recent category growth is being driven by domestic retailers, and this is a trend that is set to continue. The convenience that consumers are being offered is a great credit to the calibre of the online retail offerings that are already available in Australia. PayPal Australia’s growth figures are outpacing those of the industry and we have seen double digit growth in the last year. Our research shows that consumers prefer buying from merchants who accept PayPal as it provides them with a safer, more secure and convenient payment process. We are also pleased to see a strong desire by our retailers to continue to improve this experience, embracing both social and mobile trends to deliver more fluid and integrated online stores, thereby increasing sales. While domestic eCommerce is growing fast, Australian retailers cannot ignore the number of Australians shopping overseas. Indeed, PayPal figures show a 74 per cent increase in the amount of money sent overseas in the last year alone. The number of overseas shoppers using PayPal is also increasing, at the beginning of 2008, approximately 465,822 customers made an overseas transaction and in September 2010, a staggering 1.2 million Australians bought online from overseas retailers. Surprisingly, it is not the strength of the Aussie dollar that was the main driver for consumer shopping overseas, it is the range of goods on offer overseas that is really driving local shoppers to buy offshore. Our research demonstrated a strong preference to “buy Aussie” with nearly a quarter of Australian adults only shopping online with domestic websites. Retailers need to realise that they are not solely competing with their international counterparts on price, presenting a call to action to expand their online offerings and capture the share of the market that is going overseas. As cliché as it may sound, the online world is a huge global shopping mall. The merchants that get noticed are those whose online stores deliver a best-practice end to end customer experience. Product range is not sufficient; it must be paired with an easy to navigate site, a great checkout experience, a clear returns policy, accessible customer support, and a good packaging and handling solution. PayPal can help by ensuring that consumers experience a safe, secure and convenient
  5. 5. Lorem ipsum dolor sit amet, consectetur adipiscing elit. Nullam tempor, mauris volutpat sodales dictum, sem lectus aliquam felis, id venenatis nisi erat eu nisl. Curabitur auctor turpis in enim auctor at varius ipsum sollicitudin. Suspendisse at velit nisi, sit amet vehicula lacus. Nam sit amet malesuada dolor. Donec ultricies, sapien nec pellentesque vehicula, justo nibh mattis velit, et volutpat felis nibh id dolor. Curabitur id elit metus. Phasellus at lacus eros, eu blandit arcu. Maecenas sit amet nunc at turpis pulvinar porttitor. Sed euismod fringilla diam ut ullamcorper. Maecenas quis nibh lacus. Integer faucibus odio iaculis eros aliquet in venenatis nulla dignissim. Vestibulum sed elit dolor, id pretium eros. Mauris blandit venenatis consectetur. Etiam at leo velit, id ultricies mauris. Duis mattis lacinia odio, pulvinar dictum mauris dapibus et. Vestibulum urna nunc, condimentum non consequat laoreet, consectetur sit amet augue. Nullam cursus, sem sit amet euismod lobortis, augue nulla ultrices arcu, non sodales lacus metus adipiscing libero. Integer elementum, diam nec egestas ultrices, lacus ipsum posuere mauris, ut gravida sapien mauris commodo purus. Phasellus euismod, nibh vitae tincidunt ornare, nisi eros dictum magna, nec fringilla nibh ligula eget tortor. In viverra quam eget sem aliquet hendrerit in eget dui. Praesent convallis mattis nunc, adipiscing ullamcorper metus varius ac. Mauris rhoncus, risus ut tristique semper, eros tortor pellentesque ligula, in ullamcorper velit erat ut eros. Etiam et velit orci. Proin mollis laoreet nunc vel ullamcorper. Ut venenatis eleifend nulla, nec feugiat quam ultrices faucibus. Cras pharetra suscipit sagittis. Phasellus dui magna, porttitor at accumsan eu, faucibus ac enim. Mauris porta, nisi vel faucibus aliquet, lacus velit ultricies nisi, eu ultricies sapien ipsum quis ipsum. Aliquam tellus neque, ultrices quis posuere sit amet, imperdiet et lorem. Phasellus eu justo sed risus imperdiet condimentum. Aenean fermentum augue condimentum tellus auctor ornare. Curabitur dolor dolor, laoreet eu iaculis in, varius id arcu. Aliquam lacinia enim in libero viverra ultrices. Curabitur at mollis dolor. Fusce condimentum ipsum eu dui viverra bibendum. Proin sollicitudin, tortor ut sollicitudin interdum, leo augue cursus nisi, at tempor nulla eros sit amet neque. Integer dui neque, laoreet eget gravida nec, consectetur quis ligula. Curabitur condimentum nisi nec odio sollicitudin id blandit lacus mollis. Nulla ac accumsan arcu. Quisque id mi nisl, vitae dictum nunc. Nullam id mi ut nisi laoreet semper. Mauris sodales risus sit amet nisl commodo id pellentesque lacus ullamcorper. Praesent ultricies pharetra enim, eu venenatis nisi vehicula id. Curabitur facilisis, felis vel mollis rutrum, nisi nibh commodo nibh, a cursus augue nibh vel nibh. Curabitur pretium lorem at mauris aliquam tempor hendrerit nisi tristique. Suspendisse mollis, tortor in porttitor pretium, ipsum sem condimentum libero, eget posuere arcu nibh gravida mi. Pellentesque et est ligula. Curabitur dignissim convallis ante a sodales. Nullam congue, lorem luctus mollis blandit, dui mi aliquet turpis, non pharetra enim mi id enim. Quisque nisl augue, aliquet sit amet dignissim id, eCommerce Secure Insight - Page INTRODUCTION eCommerce Secure Insight - Page 3 EXECUTIVE SUMMARY transaction process, wherever they are in the world. Businesses that think ahead of the game, particularly about meeting the future needs and desires of their customers, are those that will prosper online. eCommerce is not merely about shifting boxes, it is about providing a fantastic customer experience. It is quite simply about responding to consumer demand in the most effective way possible. Some consumers see benefit in having access to a vast range of inventory, others appreciate the convenience of having bulky items home delivered. Merchants must assess consumer need and then look to the best solutions to deliver the experience – be it online, off-line or on mobile devices. This fantastic customer experience needs to role out across the entire eCommerce process. Both businesses and consumers need to feel confident that they can both pay, and be paid securely and this is where PayPal comes into the equation. We are proud to be considered by many as the safest, most secure and most convenient way to pay and be paid online. But we’re not resting on our laurels, and are heavily investing to make that process even simpler and easier. We have just launched a simple 2 click payment process for iPhone applications and a new digital goods experience that enables consumers to pay for content in context without having to leave the experience they are enjoying – be it a news article, streaming movies, or the purchase of a new character in a video game. Needless to say, customer experience along with safety and security sits at the core of all of our innovations. In five years or less, when there is far less cash floating around the world, we will do everything from catch a bus to work, buy our lunch, download a news article, pay our personal trainer, buy our partner a present and order a Friday night takeaway, all using a web enabled mobile device with just a couple of clicks every time. Mobile devices are shaping the way we live our lives today and businesses are challenged to integrate their offerings, in a user-friendly way onto these devices. Whilst a substantial challenge, we have already seen great successes, and at PayPal, we look forward to working with businesses to enable customer transactions, wherever they may take place, in the fastest, safest and most secure way possible. I hope you enjoy the report and find the results both informative and valuable in helping to understand the future shape and key drivers to the Australian eCommerce industry in Australia. We at PayPal look forward in shaping this future together with you. Yours, Frerk-Malte Feller Managing Director PayPal Australia
  6. 6. eCommerce Secure Insight - Page
  7. 7. eCommerce Secure Insight - Page The Australian eCommerce landscape has evolved rapidly within the last twelve months. Small businesses in Australia are increasingly adopting online business models and we have seen a number of well established bricks and mortar businesses building an online presence. With over 34,000 Australian businesses transacting online with PayPal, a number that is rapidly growing, we thought it important to provide a comprehensive overview of the eCommerce market in Australia along with strategic insights into business attitudes towards online retail. We partnered with leading global researchers, Forrester Research to investigate. forrester research.
  8. 8. eCommerce Secure Insight - Page 6 Forrester consulting - The business of Australian online retail Table Of Contents Executive Summary 6 Australian Online Retail Is Strong And Growing 7 Companies Experience Growing Pains As They Expand And Adapt 9 Key Recommendations 13 Appendix A: Methodology 13 Appendix B: Supplemental Material 13 Appendix C: Endnotes 13 © 2010, Forrester Research, Inc. All rights reserved. Unauthorized reproduction is strictly prohibited. Information is based on best available resources. Opinions reflect judgment at the time and are subject to change. Forrester®, Technographics®, Forrester Wave, RoleView, TechRadar, and Total Economic Impact are trademarks of Forrester Research, Inc. All other trademarks are the property of their respective companies. For additional information, go to www.forrester.com. 1-HLJSMR. The Business Of Australian Online Retail The Challenges And Opportunities Facing Australian Business During The Online Retail Boom Of 2010 November 2010 About Forrester Consulting Forrester Consulting provides independent and objective research-based consulting to help leaders succeed in their organizations. Ranging in scope from a short strategy session to custom projects, Forrester’s Consulting services connect you directly with research analysts who apply expert insight to your specific business challenges. For more information, visit www.forrester.com/consulting. Executive Summary 2010 has been a year of extraordinary growth for online retail in Australia. But this boom has not just been economic. There has also been an increase in debate about the sector, as Australian merchants think again about whether and how they should serve their customers via the Internet. Unfortunately, there is the perception that Australian business has largely missed the online retailing opportunity. However, a private market size evaluation and forecast that eBay commissions from Forrester Consulting each quarter shows that domestic online retail is booming in Australia. Australian businesses that are willing to experiment, innovate, and learn from their customers and their peers could find themselves in the perfect position to exploit this growth. To better understand the challenges and opportunities that face Australian merchants today, Forrester Consulting surveyed 114 Australian online retail professionals. This report is Forrester Consulting’s analysis of that survey of online retail professionals, as well as of an earlier, similar survey that Forrester Research completed in partnership with Online Retailer Expo & Conference 2010, and the private market size evaluation and forecast that Forrester Consulting prepares for eBay. Australian online retail is surging, but Australian merchants face challenges with recruitment, logistics, marketing, and price competition.
  9. 9. INTRODUCTION eCommerce Secure Insight - Page 7 Forrester consulting - The business of Australian online retail Key Findings Forrester’s study yielded four key findings: • Australian online retail, including domestic retail, is booming. While imports are important, most online retail purchases are local. Overall, Australian online retail — including auctions, imports, and travel — will reach $36.81 billion per annum in 2013. The largest segments then will be the same as today: travel and groceries. • Despite this boom, Australian online retailers face many challenges. Four of the biggest issues that online retail professionals said they faced were recruiting and retaining appropriately skilled staff, managing logistics, responding to low-priced competitors, and controlling the relative cost and effectiveness of marketing. • For multichannel retailers, one challenge is their reliance on traditional channels. Businesses that sell through their physical stores as well as online channels still rely on the former channel for most of their sales. As a result, they tend to favor those channels, providing them with better access to product and protecting them against disruption whenever possible when venturing online. • Delivery is one challenge that many retailers are willing to invest in defeating. Dissatisfaction with current delivery methods runs deep, with the high cost of delivery being the most common complaint. Nonetheless, Australian online retailers will increasingly provide costly services, like free delivery and returns, in the year ahead. Every quarter, Forrester Consulting sizes and forecasts the Australian online retail market for eBay, using a model that includes travel, auctions, and imports in addition to domestic online retail. This private study shows that: • Australian online retail’s growth is strong and sustained. Australian online retail, including travel, auctions, and imports, is growing rapidly in Australia, from $24.02 billion in 2009 to a projected $26.86billion in 2010 (see Figure 1). The rate of growth in 2010 was particularly high, driven by the launch of new online stores, a surging Australian dollar, and continued increases in the proportion of Australians who shop online. Likewise, the three years to 2013 will see growth driven by similar factors. • Domestic retail is holding its own. The share of Australian online consumption that consists of imports varies across categories, as well as between auctions and fixed-price retail. It can also rise and fall in the short term in line with the fortunes of the Australian dollar. However, despite this variation, the medium- term trend is for roughly four-fifths of all Australian online expenditures to be placed with local Web sites. The strength of domestic online retail is reinforced by the fact that many of the priciest items (like plane travel and the most common online purchases (like groceries are largely fulfilled and supported through Australian Web sites. • Travel and groceries combined are almost half of all Australian online retail. Due to the frequency with whichsome households buy groceries — which includes pantry items, alcohol and other consumable household goods like pet supplies — this is the single largest category in Australian online retail (see Figure 2). This segment is closely followed by travel, where vendors and consumers alike have quickly adopted online retail because of its efficiency. In the three years ahead, the categories that will be the strongest will be those that already dominate Australian online retail today. However, music and video will post the strongest growth as the Internet continues to migrate from the study to the living room and the pocket, encouraging more consumers to buy content online via the same devices they use to consume it. Australian Online Retail Is Strong And Growing
  10. 10. eCommerce Secure Insight - Page 8 Forrester consulting - The business of Australian online retail Source:Forrester Research,Inc. Figure 2-1 Travel And Groceries Are The Largest Segments In Australian Online Retail Source:A commissioned study conducted by Forrester Consulting on behalf of eBay,Q3 2010 2010 2011 2012 2013 Apparel, accessories, and footwear Appliances and home improvement Art and collectibles Auto parts Books Computer- related Consumer electronics Flowers Toys and video games Sporting goods Medicine and personal care Office products Music/video Jewelry Groceries Furniture Total online spend on auction and retail in millions of $AU $1,437 $1,559 $1,772 $2,025 $2,664 $2,961 $3,249 $3,569 $768 $839 $942 $1,079 $813 $875 $948 $1,004 $606 $646 $700 $751 $2,592 $2,897 $3,199 $3,604 $1,628 $1,879 $2,086 $2,319 $245 $266 $288 $310 $577 $636 $718 $792 $562 $612 $674 $752 $4,998 $5,541 $6,358 $7,175 $271 $293 $317 $339 $870 $1,002 $1,165 $1,293 $282 $303 $322 $343 $515 $542 $597 $662 $690 $756 $833 $943 Source:Forrester Research,Inc. 0 $5,000 $10,000 $15,000 $20,000 $25,000 $30,000 $35,000 $40,000 Source: A commissioned study conducted by Forrester Consulting on behalf of eBay, Q3 2010 Source: Forrester Research, Inc. Source: A commissioned study conducted by Forrester Consulting on behalf of eBay, Q3 2010 Source: Forrester Research, Inc. Figure 1 Australian Online Retail - Both Imports And Domestic - Is Booming Figure 2-1 Travel And Groceries Are The Largest Segments In Australian Online Retail
  11. 11. INTRODUCTION eCommerce Secure Insight - Page 9 Many Australian merchants are growing strongly, in line with the overall surge in online retail. However, they face significant challenges that will affect how well each of them can ride the wave. While Growing, Australian Online Retailers Face Challenges Certain challenges that confront online retailers are more common with some types of firms than others. The size of the retailer’s online channel and whether the retailer has a bricks-and-mortar channel are both important in determining which challenges matter most to each market (see Figure 3). Specifically: • Larger firms and multichannel retailers face greater challenges with recruitment. Larger firms have more to lose than smaller firms, as do multichannel retailers with successful bricks- and-mortar channels. As a result, such retailers can be risk averse. Their appetite for on-the-job learning and experimentation is lower, and they prefer to hire eCommerce professionals who have the proven ability to manage large budgets, multichannel relationships, and/or complicated eCommerce projects. Such experienced professionals are hard to find and keep, especially in Australia, with its smaller eCommerce market. • Smaller firms face challenges with logistics. Smaller firms tend to have shorter histories with managing inherently complex tasks such as receiving, warehousing, and dispatching goods. Likewise, the smaller the retailer, the less able it is to fund major investments in software or facilities that could help streamline processes like these. For small companies, managing logistics can be a major cause of angst. • Pure plays face challenges with marketing. A significant brand name is a huge head start when it comes to marketing. An Australian business that has built up its brand through decades of traditional retail can interact with its customers many thousands of times a day, through events that range from physical store visits to online traffic. Each of these interactions is an opportunity to cost-effectively market the online store. By contrast, Australian pure plays must fight harder for every customer. For them, the cost and effectiveness of marketing are eternal challenges. Multichannel Retailers Are Still Traditional Retailers First Managing multiple sales channels — such as an online store plus traditional retail — is difficult because of the large number of customer touchpoints, the complexity of managing operations and the customer experience across channels, and the tendency for each channel to Forrester consulting - The business of Australian online retail Companies Experience Growing Pains As They Expand And Adapt Source:Forrester Research,Inc.META# Source:Forrester Research,Inc.META# Source: A commissioned study conducted by Forrester Consulting on behalf of eBay, Q3 2010 Source: Forrester Research, Inc. Figure 2-2 Travel And Groceries Are The Largest Segments In Australian Online Retail
  12. 12. eCommerce Secure Insight - Page 10 Forrester consulting - The business of Australian online retail compete with the others for the attention of the business. Freed of these cross-channel constraints, pure plays have flourished in Australia. On the other hand, multichannel retailers are evolving more slowly, which is reinforced by the fact that: • Traditional channels still dominate their retail trade. Online retailers that have bricks-and- mortar stores still make most of their sales through those stores. Of the 40 multichannel retailers that felt able to estimate how their sales were split across channels, 31 said that online channels accounted for 30% or less of their total sales. What’s more, 24 said they expected online channels to still account for 30% of less of their total sales in the year ahead. For some time into the future, most multichannel retailers will rely on their traditional channels. • Traditional channels still enjoy greater access to product. Theoretically, an online store can provide customers with infinite product variety. However, the reality is that the cost of online ranging and product content management can increase with the number of products. The result is that multichannel retailers tend to offer a fuller range of products in their bricks- and-mortar stores (see Figure 4). Of 46 multichannel retailers, 37 sometimes, often, or always offer products through their bricks-and-mortar stores that they do not offer online. Conversely, just 24 of these multichannel retailers sometimes, often, or always offer products online that they do not offer through their bricks-and-mortar stores. • Traditional channels usually command equal or higher prices. Of the 41 multichannel retailers that were able to identify a consistent pattern in their online and physical store prices, 17 sometimes or usually charged a lower price online, 21 usually charged the same across channels, and just three usually or sometimes charged a higher price online. Among the stores that sometimes or usually charge less online, the average price differential is 10%. Delivery Is A Headache For Australian Online Retailers, But It Is Also A Key To Success Australian online retailers struggle with the price of delivery, and to a lesser extent with issues of reliability of delivery, geographic reach, and maximum package sizes. Nonetheless, they are planning to increase their investment in delivery services in the year ahead, adding options that customers value highly such as free shipping and returns. • Overall, cost of delivery is the greatest source of dissatisfaction. Some of the online retail professionals that were dissatisfied with delivery were able to provide an explanation of their experience. The only retailer who explained why it was dissatisfied with having its own staff deliver its goods said it was because of the high cost of this form of delivery. High cost also accounted for three of the seven explanations of dissatisfaction with Australia Post, three out of four regarding local courier companies, one out of two regarding customers collecting their purchases themselves, and the only explanations given for dissatisfaction with direct downloads and global courier companies. • Other factors compounded merchant dissatisfaction with the cheapest delivery methods. Two of the four retailers that explained their dissatisfaction with local courier companies cited unreliable delivery, as did four out of seven that explained their dissatisfaction with Australia Post Geographic reach accounted for two out of four explanations of dissatisfaction with local courier companies. With Australia Post, three out of seven explanations mentioned maximum shipment sizes. This was in addition to the dissatisfaction they expressed with the price of these services. (Multiple responses were permitted.) • Despite these challenges, retailers will invest to improve their delivery. While costly, providing better delivery options is one of the most important ways in which online retailers can compete. In particular, providing free delivery and return helps customers to become more comfortable with high-risk online purchases, such as ordering clothing and footwear that might not fit. Aware of this, Australian online retailers are planning costly improvements to their delivery service in the year ahead (see Figure 5). Twenty-two percent will introduce next-day delivery, in addition to the 31% that already provide it. Twenty-one percent will introduce free delivery, taking the total that provide this service to 62%. Sixteen percent will provide free returns, on top of the 26% that do this already. And 18% will let customers select the time of delivery, which only 18% of Australian online retailers support today.
  13. 13. INTRODUCTION eCommerce Secure Insight - Page 11 Forrester consulting - The business of Australian online retail Source:Forrester Research,Inc.META# Figure 3 Size, Scale, And Focus Create Different Online Retail Challenges Source: A commissioned study conducted by Forrester Consulting on behalf of eBay, Q3 2010 Source: Forrester Research, Inc.
  14. 14. Forrester consulting - The business of Australian online retail eCommerce Secure Insight - Page 12 Source:Forrester Research,Inc.META# Replace text with meta id number >> Source:Forrester Research,Inc.META# Figure 5 Australian Online Retailers Will Invest In Better Delivery Source:A commissioned study conducted by Forrester Consulting on behalf of PayPal Australia,October 2010 Next-day delivery Letting the customer select the time of delivery Base:46 Australian online retail professionals who work for or own multichannel retailers 31% 11% 22% 18% 47% 71% Currently provide Plan to provide in the next 12 months Do not plan to provide in the next 12 months Figure 4 Multichannel Retailers Are More Likely To Offer Products In-Store Figure 5 Australian Online Retailers Will Invest In Better Delivery Source: A commissioned study conducted by Forrester Consulting on behalf of eBay, Q3 2010 Source: Forrester Research, Inc. Source: A commissioned study conducted by Forrester Consulting on behalf of eBay, Q3 2010 Source: Forrester Research, Inc.
  15. 15. INTRODUCTION Forrester consulting - The business of Australian online retail eCommerce Secure Insight - Page 13 KEY RECOMMENDATIONS While online retail is booming in Australia, it still faces challenges. New and existing merchants, suppliers to the sector, and the industry as a whole should take decisive action designed to relieve these pressures. In particular: • Multichannel retailers should reorganize around customers, not channels. At present, traditional channels account for most sales in multichannel businesses, and this can be seen as a powerful argument against dramatic change. But from the customers’ point of view, channels are just a means to an end. From their point of view, the most important issue is that they can access brands, channels, and products at whatever time and place they want, using whatever means make sense to them. To better meet such customer needs, therefore growing the business over the longer term, multichannel retailers should organize their business and create team incentives that are tied to customer goals, such as ease of doing business, more than to channel-specific performance metrics. • New players should disrupt Australian logistics. There are many operators in Australia’s delivery market, but most of the current delivery models are nearly identical: The provider delivers the product individually to the customer’s door. But other models are possible. For example, larger retailers that own their own fleets could deliver goods on behalf of other companies. For example, a customer might wait for her next grocery delivery to return clothing that doesn’t fit free of charge. Likewise, shopping centre owners could provide online order pickup bays for their tenants. The goal would be to make it simple and affordable for Australian retailers to provide unprecedented levels of service to their customers, including delivery. • The online industry should promote Australia as a career destination in the US and UK. While online retail is booming in the US and UK, both economies are still suffering, and some experienced online retail professionals from the US and UK might expect greater job security or a more relaxed lifestyle in Australia. They would certainly find greater opportunities to fast-track their careers in Australia based on their existing experience in their home markets. The online retail industry should work to relieve the skills shortage in Australia by encouraging temporary and permanent migration by overseas eCommerce professionals • Domestic online retailers should trumpet their successes. Current debate in Australia highlights what’s wrong with Australian online retail, with a focus on imports as well as the handful of iconic Australian retail brands that are not currently selling online. Successful Australian online retailers should step forward to tell the other side of the story. If domestic online retail is to continue to prosper, it needs a continuous supply of talented individuals who have confidence in the sector’s ability to perform in Australia. Leading retailers and the industry as a whole should encourage this optimism. Appendix Appendix A: Methodology In this study, Forrester conducted an online survey of 114 Australian online retail professionals to evaluate the opportunities and challenges they face during Australia’s current online retailing boom. Survey participants included decision-makers in leadership and full-time professional roles in the online retail sector in Australia. The survey asked participants about their online business performance, their use of all retail channels, and how they manage logistics and other challenges. Respondents were offered a free copy of this report as a thank you for time spent on the survey. The study began in September 2010 and was completed in October 2010. Appendix B: Supplemental Material Related Forrester Research “Online Retailing In Australia 2010: Technology Investment,” Forrester Research, Inc., August 19, 2010 “Online Retailing In Australia 2010: Performance And Channels,” Forrester Research, Inc., August 2, 2010 “Online Retailing In Australia 2010: Marketing, Merchandising, And Customer Service,” Forrester Research, Inc., July 6, 2010 Appendix C: Endnotes 1 On average, current Australian online retailers surveyed in Q1 2010 expected their sales to grow by 30% in the year ahead, outstripping the 3% growth that the IMF was then predicting for Australia’s economy as a whole. What’s more, 70% of respondents expected their business to grow by more than 10%, and only three out of 334 respondents were anticipating a contraction. Source: “Online Retailing In Australia 2010: Performance And Channels,” Forrester Research, Inc., August 2, 2010. 2 Overall, search marketing is the most popular marketing technique used by Australian online retail professionals because of its flexibility and cost-effectiveness. Cross-channel promotion is also popular with those who work in multichannel businesses. Source: “Online Retailing In Australia 2010: Performance And Channels,” Forrester Research, Inc., August 2, 2010. 3 Of the 334 Australian online retail professionals who responded to a Forrester Research and Online Retailer Expo & Conference 2010 survey in Q1 2010, 224 owned or worked for a business that had no bricks-and- mortar presence. Source: “Online Retailing In Australia 2010: Performance And Channels,” Forrester Research, Inc., August 2, 2010. 4 Improved content on the site is the leading area of investment that Australian online retail professionals identified for their businesses when surveyed in Q1 2010. Source: “Online Retailing In Australia 2010: Marketing, Merchandising, And Customer Service,” Forrester Research, Inc., July 6, 2010. The core eCommerce platform and the content management system are the two leading technology investment priorities, driven in part by the need to reduce the cost and complexity of product content management. Source: “Online Retailing In Australia 2010: Technology Investment,” Forrester Research, Inc., August 19, 2010.
  16. 16. Lorem ipsum dolor sit amet, consectetur adipiscing elit. Nullam tempor, mauris volutpat sodales dictum, sem lectus aliquam felis, id venenatis nisi erat eu nisl. Curabitur auctor turpis in enim auctor at varius ipsum sollicitudin. Suspendisse at velit nisi, sit amet vehicula lacus. Nam sit amet malesuada dolor. Donec ultricies, sapien nec pellentesque vehicula, justo nibh mattis velit, et volutpat felis nibh id dolor. Curabitur id elit metus. Phasellus at lacus eros, eu blandit arcu. Maecenas sit amet nunc at turpis pulvinar porttitor. Sed euismod fringilla diam ut ullamcorper. Maecenas quis nibh lacus. Integer faucibus odio iaculis eros aliquet in venenatis nulla dignissim. Vestibulum sed elit dolor, id pretium eros. Mauris blandit venenatis consectetur. Etiam at leo velit, id ultricies mauris. Duis mattis lacinia odio, pulvinar dictum mauris dapibus et. Vestibulum urna nunc, condimentum non consequat laoreet, consectetur sit amet augue. Nullam cursus, sem sit amet euismod lobortis, augue nulla ultrices arcu, non sodales lacus metus adipiscing libero. Integer elementum, diam nec egestas ultrices, lacus ipsum posuere mauris, ut gravida sapien mauris commodo purus. Phasellus euismod, nibh vitae tincidunt ornare, nisi eros dictum magna, nec fringilla nibh ligula eget tortor. In viverra quam eget sem aliquet hendrerit in eget dui. Praesent convallis mattis nunc, adipiscing ullamcorper metus varius ac. Mauris rhoncus, risus ut tristique semper, eros tortor pellentesque ligula, in ullamcorper velit erat ut eros. Etiam et velit orci. Proin mollis laoreet nunc vel ullamcorper. Ut venenatis eleifend nulla, nec feugiat quam ultrices faucibus. Cras pharetra suscipit sagittis. Phasellus dui magna, porttitor at accumsan eu, faucibus ac enim. Mauris porta, nisi vel faucibus aliquet, lacus velit ultricies nisi, eu ultricies sapien ipsum quis ipsum. Aliquam tellus neque, ultrices quis posuere sit amet, imperdiet et lorem. Phasellus eu justo sed risus imperdiet condimentum. Aenean fermentum augue condimentum tellus auctor ornare. Curabitur dolor dolor, laoreet eu iaculis in, varius id arcu. Aliquam lacinia enim in libero viverra ultrices. Curabitur at mollis dolor. Fusce condimentum ipsum eu dui viverra bibendum. Proin sollicitudin, tortor ut sollicitudin interdum, leo augue cursus nisi, at tempor nulla eros sit amet neque. Integer dui neque, laoreet eget gravida nec, consectetur quis ligula. Curabitur condimentum nisi nec odio sollicitudin id blandit lacus mollis. Nulla ac accumsan arcu. Quisque id mi nisl, vitae dictum nunc. Nullam id mi ut nisi laoreet semper. Mauris sodales risus sit amet nisl commodo id pellentesque lacus ullamcorper. Praesent ultricies pharetra enim, eu venenatis nisi vehicula id. Curabitur facilisis, felis vel mollis rutrum, nisi nibh commodo nibh, a cursus augue nibh vel nibh. Curabitur pretium lorem at mauris aliquam tempor hendrerit nisi tristique. Suspendisse mollis, tortor in porttitor pretium, ipsum sem condimentum libero, eget posuere arcu nibh gravida mi. Pellentesque et est ligula. Curabitur dignissim convallis ante a sodales. Nullam congue, lorem luctus mollis blandit, dui mi aliquet turpis, non pharetra enim mi id enim. Quisque nisl augue, aliquet sit amet dignissim id, varius eu leo. Curabitur ullamcorper, est non mollis auctor, neque sem facilisis lacus, vitae semper ante erat non arcu. Phasellus adipiscing orci eget ligula malesuada nec interdum leo semper. Vivamus dignissim fermentum nisl, ultricies suscipit diam vestibulum at. Nam sed faucibus lacus. Donec a augue diam. Proin sit amet libero ante, ut adipiscing dui. Suspendisse nec felis leo, non tempus dolor. Integer cursus mi quis mi pulvinar laoreet. Nullam ipsum orci, ullamcorper eu elementum vel, mattis ac velit. Nulla nec neque a est fermentum adipiscing tempor in lacus. Fusce scelerisque arcu in nulla viverra euismod. In gravida felis quis diam porta dapibus. Ut fermentum sollicitudin elementum. Suspendisse eu ligula tortor, ac gravida elit. In mattis ultrices velit bibendum tristique. Vivamus porta nunc ac nunc gravida hendrerit condimentum in magna. Sed blandit lacinia semper. Maecenas purus nulla, condimentum vel rhoncus viverra, volutpat vitae mi. Praesent ante risus, ullamcorper id luctus at, faucibus quis nibh. Donec vestibulum, ipsum molestie fringilla vulputate, arcu sem scelerisque erat, eget tincidunt nibh arcu in nibh. Maecenas pretium, turpis ac venenatis tincidunt, eros nisi pellentesque massa, non imperdiet erat felis in odio. Lorem ipsum dolor sit amet, consectetur adipiscing elit. Nullam tempor, mauris volutpat sodales dictum, sem lectus aliquam felis, id venenatis nisi erat eu nisl. Curabitur auctor turpis in enim auctor at varius ipsum sollicitudin. Suspendisse at velit nisi, sit amet vehicula lacus. Nam sit amet malesuada eCommerce Secure Insight - Page INTRODUCTION the leading edge research.The proportion of Australian retail spend going online is ever increasing as consumers learn the benefits of clicks over bricks. Indeed, 3.5 million Australian consumers now transact regularly online with PayPal and this number is rising. Responding to consumer demand are the thousands of Australian businesses both large and small building their presence online. So what does the Australian online consumer look like? What are their preferences when it comes to online shopping and what do they really think about the world of eCommerce? PayPal partnered with The Leading Edge to find out.
  17. 17. eCommerce Secure Insight - Page 16 the leading edge research Online shopping in Australia is booming and the demand from consumers for sophisticated and integrated online offerings from Australian retailers is ever present. Whilst Australian retailers are gearing up their presence online, Australian consumers are already there – ready and waiting. Understanding consumer behaviour and their drivers for shopping online is critical to any retailer in the online space. Working with PayPal, The Leading Edge conducted two studies to provide insight into the mind of the Australian Online Shopper. The Leading Edge is a strategic market research consultancy, working with many of Australia’s and the world’s biggest and best businesses and brands. The Leading Edge solves business problems through insights, uses creative solutions and delivers results. The Methodology • The first study involved a nationally representative telephone survey of 1,000 Australian adults to understand the size and make up of online shopping in Australia. • The second study consisted of an online survey exploring the opinions of 1,500 Australian online shoppers, aged 18 to 54 years old and their behaviour and attitudes to online shopping in Australia Online shoppers in Australia Online shoppers are no longer a niche of the Australian population and it is near impossible to classify them into particular segments of the market. An Australian online shopper is just as likely to be a teenage boy purchasing a new computer game as a middle aged woman purchasing her preferred perfume. However, whilst there is a sweeping online demographic, the research shows more than a third (35%) of online shoppers living in rural areas. This is somewhat surprising as rural Australian’s often have poorer connections and access to the Internet than their city counterparts. Drivers to online shopping The main drivers to shopping online from domestic websites reflect the desire for ‘Convenience’, stated as the most important factor by 39% of domestic online shoppers; ‘Availability 24/7’ (22%) and; ‘ Easier than Visiting a Store’ (17%). Unsurprisingly, the next most important set of reasons for shopping online reflect consumers seeking ‘Value; Access to Offers Not in Store’ (18%) and ‘Less Expensive’ (15%). “When looking at overseas drivers, we found that these differ dramatically from domestic drivers. Firstly, it’s not about ease it’s about wider choice and selection of goods.” Almost one third of all those shopping from overseas websites state that ‘Access to Goods’ and ‘Services Not Available in Australia’ (32%) is an important driver to overseas purchases. This is a somewhat surprising finding for those who considered price to be the key overseas driver and a call to action for Australian retailers to increase the selection of goods that they offer online. Combining this with those who state there is ‘Greater Choice’ overseas (18%, it is clear that wider availability overseas than in the Australian market is the key driver to international websites. Value is also incredibly important to Australian consumers. ‘Less Expensive goods and services’ (19%) are at a similar level in terms of importance to ‘Greater Choice’
  18. 18. INTRODUCTION eCommerce Secure Insight - Page 17 “When looking at overseas drivers, we found that these differ dramatically from domestic drivers. Firstly, it’s not about ease it’s about wider choice and selection of goods.” Barriers to online shopping overseas Not all online shoppers in Australia shop overseas, which is both good news and an opportunity for domestic retailers; 23% of Australian adults only shop online with domestic websites. A large number of Australians have a general Preference for Buying from Australian Companies. While this obviously reflects a “buy Aussie” mindset, it is also likely that it reflects broader concerns of shopping overseas. One third of Australian consumers (33%) believe it is ‘Safer to Buy from Australia’, while a similar number (30%) worry about ‘Stories of Fraud from Overseas Websites’, again presenting an opportunity for domestic retailers to target these consumers. Other concerns include ‘Worry about Giving Payment Details’ (25%), ‘Who can Help if Things Go Wrong’ (24%) and ‘Worry what I Buy Won’t be Delivered’ (23%), it is clear that there is concern about getting burned and having nowhere to turn. Barriers to online shopping domestically The most frequent reason for not shopping more online is ‘Not Adequately Protected if Something Goes Wrong’ (33%). Many online shoppers still feel exposed and there are a further range of concerns apparent from the ‘Possibility of Fraud’ (26%) to ‘Providing Details Online’ (14%). Beyond the emotional concerns there are more functional issues at play that limit online shoppers’ spend. Of these, the biggest issue is shoppers ‘Don’t Like Paying Delivery Costs’ (28%). Beyond the costs, ‘Product Interaction’ is an issue; ‘Correctly Identifying the Right Size’ (25%) and ‘Touch and Feel the Product’ (24%) are key issues where online retailers can focus to help consumers make their purchases with less stress, to activate further revenue for the online marketplace. Conclusion Australians are becoming smart online shoppers, looking to purchase goods both domestically and overseas. Although there are a number of barriers to entry, retailers are providing consumers with reassurance and tools to address their concerns such as safe payments and solid returns policies. Most notably is the opportunity for retailers to take advantage of the current Australian retail spend going abroad. The broader selection of goods, rather than price is the key driver to Australian retail spend going overseas and Australians are showing a genuine preference to shop at home grown retailers when they can. the leading edge research
  19. 19. eCommerce Secure Insight - Page 18
  20. 20. Lorem ipsum dolor sit amet, consectetur adipiscing elit. Nullam tempor, mauris volutpat sodales dictum, sem lectus aliquam felis, id venenatis nisi erat eu nisl. Curabitur auctor turpis in enim auctor at varius ipsum sollicitudin. Suspendisse at velit nisi, sit amet vehicula lacus. Nam sit amet malesuada dolor. Donec ultricies, sapien nec pellentesque vehicula, justo nibh mattis velit, et volutpat felis nibh id dolor. Curabitur id elit metus. Phasellus at lacus eros, eu blandit arcu. Maecenas sit amet nunc at turpis pulvinar porttitor. Sed euismod fringilla diam ut ullamcorper. Maecenas quis nibh lacus. Integer faucibus odio iaculis eros aliquet in venenatis nulla dignissim. Vestibulum sed elit dolor, id pretium eros. Mauris blandit venenatis consectetur. Etiam at leo velit, id ultricies mauris. Duis mattis lacinia odio, pulvinar dictum mauris dapibus et. Vestibulum urna nunc, condimentum non consequat laoreet, consectetur sit amet augue. Nullam cursus, sem sit amet euismod lobortis, augue nulla ultrices arcu, non sodales lacus metus adipiscing libero. Integer elementum, diam nec egestas ultrices, lacus ipsum posuere mauris, ut gravida sapien mauris commodo purus. Phasellus euismod, nibh vitae tincidunt ornare, nisi eros dictum magna, nec fringilla nibh ligula eget tortor. In viverra quam eget sem aliquet hendrerit in eget dui. Praesent convallis mattis nunc, adipiscing ullamcorper metus varius ac. Mauris rhoncus, risus ut tristique semper, eros tortor pellentesque ligula, in ullamcorper velit erat ut eros. Etiam et velit orci. Proin mollis laoreet nunc vel ullamcorper. Ut venenatis eleifend nulla, nec feugiat quam ultrices faucibus. Cras pharetra suscipit sagittis. Phasellus dui magna, porttitor at accumsan eu, faucibus ac enim. Mauris porta, nisi vel faucibus aliquet, lacus velit ultricies nisi, eu ultricies sapien ipsum quis ipsum. Aliquam tellus neque, ultrices quis posuere sit amet, imperdiet et lorem. Phasellus eu justo sed risus imperdiet condimentum. Aenean fermentum augue condimentum tellus auctor ornare. Curabitur dolor dolor, laoreet eu iaculis in, varius id arcu. Aliquam lacinia enim in libero viverra ultrices. Curabitur at mollis dolor. Fusce condimentum ipsum eu dui viverra bibendum. Proin sollicitudin, tortor ut sollicitudin interdum, leo augue cursus nisi, at tempor nulla eros sit amet neque. Integer dui neque, laoreet eget gravida nec, consectetur quis ligula. Curabitur condimentum nisi nec odio sollicitudin id blandit lacus mollis. Nulla ac accumsan arcu. Quisque id mi nisl, vitae dictum nunc. Nullam id mi ut nisi laoreet semper. Mauris sodales risus sit amet nisl commodo id pellentesque lacus ullamcorper. Praesent ultricies pharetra enim, eu venenatis nisi vehicula id. Curabitur facilisis, felis vel mollis rutrum, nisi nibh commodo nibh, a cursus augue nibh vel nibh. Curabitur pretium lorem at mauris aliquam tempor hendrerit nisi tristique. Suspendisse mollis, tortor in porttitor pretium, ipsum sem condimentum libero, eget posuere arcu nibh gravida mi. Pellentesque et est ligula. Curabitur dignissim convallis ante a sodales. Nullam congue, lorem luctus mollis blandit, dui mi aliquet turpis, non pharetra enim mi id enim. Quisque nisl augue, aliquet sit amet dignissim id, varius eu leo. Curabitur ullamcorper, est non mollis auctor, neque sem facilisis lacus, vitae semper ante erat non arcu. Phasellus adipiscing orci eget ligula malesuada nec interdum leo semper. Vivamus dignissim fermentum nisl, ultricies suscipit diam vestibulum at. Nam sed faucibus lacus. Donec a augue diam. Proin sit amet libero ante, ut adipiscing dui. Suspendisse nec felis leo, non tempus dolor. Integer cursus mi quis mi pulvinar laoreet. Nullam ipsum orci, ullamcorper eu elementum vel, mattis ac velit. Nulla nec neque a est fermentum adipiscing tempor in lacus. Fusce scelerisque arcu in nulla viverra euismod. In gravida felis quis diam porta dapibus. Ut fermentum sollicitudin elementum. Suspendisse eu ligula tortor, ac gravida elit. In mattis ultrices velit bibendum tristique. Vivamus porta nunc ac nunc gravida hendrerit condimentum in magna. Sed blandit lacinia semper. Maecenas purus nulla, condimentum vel rhoncus viverra, volutpat vitae mi. Praesent ante risus, ullamcorper id luctus at, faucibus quis nibh. Donec vestibulum, ipsum molestie fringilla vulputate, arcu sem scelerisque erat, eget tincidunt nibh arcu in nibh. Maecenas pretium, turpis ac venenatis tincidunt, eros nisi pellentesque massa, non imperdiet erat felis in odio. Lorem ipsum dolor sit amet, consectetur adipiscing elit. Nullam tempor, mauris volutpat sodales dictum, sem lectus aliquam felis, id venenatis nisi erat eu nisl. Curabitur auctor turpis in enim auctor at varius ipsum sollicitudin. Suspendisse at velit nisi, sit amet vehicula lacus. Nam sit amet malesuada eCommerce Secure Insight - Page INTRODUCTION staying safe online.The number one concern for consumers when shopping online is the security of their personal details. As Australian businesses build their presence online, the issue of security must always stay front of mind. PayPal is built around security and helping businesses, and consumers, to transact safely online sits at the core of our proposition. We asked Alastair MacGibbon, Founder of the Internet Safety Institute, an Australian industry body that exists to encourage the collaboration between businesses, government and international organisations to provide a safe online environment, to share his views.
  21. 21. eCommerce Secure Insight - Page 20 STAYING SAFE ONLINE Understanding online crime For every crime we see online there is an offline analogue. Hacking into a business’ computer is the same as breaking into their office and rifling through files. Spam emails are akin to junk mail. Website defacement is graffiti. Identity theft and fraud, is, well, identity theft and fraud. The list goes on. However, the internet does offer certain advantages as a channel for criminals: increased geographic reach; a large and growing potential victim base of well over a billion people; a poorly regulated series of markets with insufficient governmental, business and social responses; and an unwary public. In recent years we have seen that ‘malware’ - malicious criminal programs which perform functions not authorised by the user like leaving a ‘back door’ open to the computer or transmitting passwords or sequences of keystrokes to online collection points - has proliferated, exponentially Oftentimes such malware is combined with ‘social engineering’, aimed at convincing users to undertake activities they otherwise would not. It is this amalgam of devious software and human trickery which has compounded the problem. A tipping point occurred around 2003 with the advent of ‘phishing’, where criminals realised consumers held information of value and began masquerading as reputable businesses, using fake emails and websites to trick consumers out of their passwords and other identity credentials, like credit card and bank details. Countless millions of people globally have fallen victim. Of course that is not to say central repositories are disregarded by cyber criminals. For example, in August 2009, Miami resident Albert Gonzalez was charged for his part in stealing 140 million credit card details after compromising US credit card processor Heartland Payment Systems, 7-Eleven, and Hannaford Brothers supermarkets. In March 2010 he was sentenced to 20 years imprisonment. But it is not all doom and gloom. While criminals have been highly efficient at stealing identity and financial credentials to a point where there is now a glut, resulting in dramatic price drops on criminal black market trading portals. That efficiency has not transferred to those who try to strip money out of the system by exploiting those credentials. This is the point where the crime moves from online to offline: people (‘mules’) are needed to ‘cash out’ from bank accounts and wire money to criminal syndicates offshore via Western Union. Even though recruitment for mules is carried out on the internet via work from home and dating websites, as well as within certain ethnic communities, criminals have not been able to find enough participants. But criminals adapt. We are seeing an increase in large- scale “breakout” frauds with coordinated geographically dispersed activities, taking money out of the system in very tight windows. There has also been a shift towards stealing EFTPOS and debit card credentials at ATMs and point of sale (POS) devices, so cards can be used to withdraw funds directly rather than having to transfer money via internet accounts. In the past few years online crime has evolved from a cottage craft to an industrial process. As broadband penetration increases, and Australians’ appetite for internet and mobile devices continues to grow, the problem will only become more important to address.
  22. 22. INTRODUCTION eCommerce Secure Insight - Page 21 STAYING SAFE ONLINE The consumer response Australians are amongst the most active internet users in the world, and there are few signs demand will slow. Online consumers have shown a capacity to rise above the actual crime threat level. Some of this may be misplaced bravado; some a disinterest in their safety; most, probably due to a failure on the part of IT security and crime experts to adequately articulate the threat. It is easy to see how problems keep occurring. The March 2009 Australian Communications and Media Authority, Australia in the Digital Economy Report 1: Trust and Confidence highlighted the complacency of the Australian internet population with less than 50 per cent of survey respondents having anti-virus software, and even fewer with firewalls or other protective measures. This is inviting computer compromise and theft of personal and financial data. It is a cavalier act on the part of individuals, threatening not just themselves but the rest of us online. Other surveys indicate that the biggest fear Australians have online is the loss of their personal financial credentials. This has been a major factor driving consumer uptake of online payment services such as PayPal which allows online payments to occur without the sharing of personal financial information. Consumers are also very rational in that positive experience leads to more activity, and negative experiences have been shown to reduce online activity. On the whole, consumers need to do more. They need to: • Be more wary of how and where they expose personal and financial credentials • Use safer payment methods online • Install and update anti virus and firewall software, as well as regularly patch their operating systems and software applications • Begin to demand security and privacy from companies they do business with online, and if not satisfied, withdraw their custom While there is no doubt individual end users need to be more responsible in reducing their own risk, the mantra of end user responsibility has often been taken as an opportunity for governments and businesses to play a minimalist role and that is where the biggest failings have occurred. The business response The internet is a highly competitive place for businesses. This, coupled with a weak regulatory environment (fostered by these businesses) and fast-paced technological advances, has meant cooperation between businesses and industry good citizenship has been largely lacking over time. Instead, an anarchic ‘gold rush’ mentality has prevailed. But the longer term viability (and profitability) of the internet depends upon business taking a more cooperative approach towards chronic issues like criminal exploitation. Just as we would see a group of shopkeepers banding together offline to help remove graffiti and beautify a landscape, to work with local government and improve the amenity of a shopping district to lift the mutual economic prospects for all by creating a better, safer, user experience for their customers, we need to see internet businesses do the same. Businesses need to view online crime as a customer retention issue, certainly as a customer activity issue, even as a customer acquisition issue. Widespread losses (even if attributable to the customer’s computer or actions) will erode the internet channel through lost consumer confidence, brand and reputation. At a tactical level, fraud against online businesses is also a major issue. How do customers prove they are who they say they are, and that they have legitimate control over the financial instrument they are presenting? One of the enduring problems for using credit and debit cards online is that they were just not designed for that purpose. Card not present transactions leave merchants at risk of chargebacks. By the time a consumer charges back, the merchant will have shipped the goods or provided the services. Every fraud perpetrated against a business will require several legitimate sales to cover the loss simply
  23. 23. eCommerce Secure Insight - Page 22 because of the margin most businesses operate on: if you have a 25% margin you need 4 legitimate sales to cover a fraud, if you have a 10% margin, 10 sales, and so on. In response, many businesses have built various fraud rules ranging from credit card BIN limitations, IP blocking, through to blacklists of physical and email addresses where they have lost money previously. The process tends to be highly manual, and inaccurate. Most online criminals will be able to bypass these simple rules and are doing so at a greater rate. More sophisticated scalable third party fraud detection engines are needed. Collectively, online businesses need to offer safer services to their customers, where education, security and encryption are built into the product, rather than - oftentimes - added as an afterthought. They should prove their security credentials, by outlining plain English privacy policies; demonstrating their understanding of payment card industry data security standards (PCI DSS); and their overall site security (trust marks from legitimate third party website security firms). And businesses need to engage the Australian government as an ally, to offer their deep knowledge of the internet to assist government’s role in protecting its citizens. The government response While Australian policy on cyber security and safety has progressed (and in the right direction), the gap between Australia’s capabilities and our needs is widening. The uptake of information and communications technologies has been so rapid and corresponding threats and exploits have been exponential, making it hard for government institutions to keep pace with the unintended consequences. Additionally, governments have pursued a ‘light touch’ approach towards telecommunications and broadcast regulation (co-regulatory and industry self-regulatory models) expecting those businesses to deliver solutions greater than or equal to the threats. And they - in most cases - haven’t. And the bureaucracy has taken a narrow definition of cyber security (based on the criminal code definition of cybercrime: unauthorised access to, or impairment of, data on computer systems), thereby excluding much of the victimisation which occurs at the consumer level. The reality of online victimisation is that it is a combination of technical and social vectors used by criminals, often undistinguishable by the victim. The multi-jurisdictional nature of the internet hampers efforts to fight its abuse. Law enforcement, domestic intelligence and regulatory agencies are jurisdictionally bound, and criminals exploit the inefficiencies of jurisdiction to their own advantage. The small nature of many individual online incidents means that much of the time they go unnoticed even “We need an internet crime complaints ‘shopfront’ for people to report matters, and to seek advice.”
  24. 24. INTRODUCTION if reported. One individual act may be spread across many jurisdictions and be replayed against thousands of victims, all of whom have a small loss that combined becomes something of much greater magnitude. The fragmented and often opaque nature of incident reporting prevents us from seeing a true picture. We need an internet crime complaints ‘shopfront’ for people to report matters, and to seek advice. A recent Federal Parliamentary committee inquiry into cybercrime called for the same thing. Such a ‘shopfront’ would deliver significant benefits, including an ability to: • aggregate complaints to better determine the scope of crime, and to pass on that information to relevant agencies • gather intelligence and trends on scams, illegal content, crime, and IT security attacks from Australian households and businesses • provide a single point of education and remediation for Australians • give a sense of redress to victims, reducing feelings of helplessness and frustration • pass on relevant information to other countries for their action • reduce individual victimisation and losses • provide information back to industry to reduce further victimisation. It is time for the Australian government to consider whether the current ‘light touch’ approach towards the internet has served its use-by date. It allowed Australia to develop its internet capacity in a relatively unfettered and competitive way, but at the cost of safety and security, which may now be inhibiting future growth. Internet Service Providers (ISPs) play a crucial role in connecting Australians to the internet, as do others in the internet industry such as registrars (who issue domain names), and they could play a much greater role in protecting us. But for a long time many of them have argued that as providers of a commercial service, they are unable to assist. Banks sit in the same boat, but many years ago governments recognised that they could play an important part in fighting crime through financial monitoring, and thus introduced anti-money laundering and ‘know your customer’ requirements. Additionally, businesses need to have strong incentive to collect and store less information and better protect the information they do collect. Some of this change can be brought about by the government acting on the data disclosure changes suggested by the Australian Law Reform Commission in its review of the Privacy Act. In particular the need for businesses to notify individuals if data is lost. Lastly, government education efforts have been well intentioned but sporadic, failing to reach most homes and businesses, and certainly not changing behaviour. The Australian Government needs to undertake a sustained ‘public health’ style approach - in conjunction with responsible online businesses - to change poor internet habits. security eCommerce Secure Insight - Page 23
  25. 25. eCommerce Secure Insight - Page 24
  26. 26. PAYPAL OVERVIEW What is PayPal? PayPal is a secure payments system that lets people buy online without sharing their personal financial information. A PayPal user can purchase goods or services online through their PayPal account with a credit card, debit card, bank account or PayPal balance. PayPal enables businesses to get paid electronically, in a number of different currencies. PayPal’s advanced security techniques enable safe online transactions, offering both businesses and consumers a convenient and safe way to pay and be paid online. HOW PAYPAL HELPS ONLINE BUSINESSES With no set up fee and an easy fee structure, PayPal is easy to manage and easy to implement. Recognised globally as a trusted payment method, PayPal gives consumers both peace of mind and choice when shopping online, helping to foster greater sales conversion rates. With unrivalled anti -fraud technology, transaction and financial information is kept safe and private protecting both consumers and businesses. For more information please visit www.paypal.com.au or speak to a member of our team on 1800-729725 (1800 PAYPAL). PayPal in Australia PayPal has operated in Australia for 5 years and over this time the total number of transactions processed by PayPal Australia has grown 5 fold. With3.5 million active users and 30,000 Australian businesses now using PayPal , the number of transactions grew 32 per cent between calendar year 08 and 09. Half of Australia’s top 100 retailers now use PayPal and since 2005 PayPal’s off eBay business has grown 10 fold and now representing almost half of all payment volume. Enabling payment for both large and small businesses, PayPal’s total payment volume in 2009 was almost US$2 billion, an increase of 32 per cent from 2008, demonstrating rapid growth as consumers and businesses seek fast, safe and secure ways to shop online. With more than 87 million active accounts in 190 markets and 24 currencies, PayPal enables global eCommerce.

×