1

Breakfast Briefing

Sponsored by:

eCommerce in Australia

Research Insights and Analysis 23 June 2010

Phil Harpur, Senior Research Manager, Digital Media ANZ

2

Frost & Sullivan eCommerce Study – Key Deliverables

1. Consumer survey - 1000 Australian online shoppers

Deep dive analysis - five product categories.

Electronics (TV, Home Theatre, Audio, Cameras & Mobile

Phones)

Computers (Hardware, Software, Peripherals & Accessories)

Books CDs/ DVDs

Jewellery + Fashion Accessories

Clothing & footwear

2. In-depth interviews – of local etailers.

Full report to be released in early July

3

Australian consumer eCommerce landscape

Australia lags US & UK markets significantly.

Aus online is 3% of total retail sales (domestic) vs. 5%+ in

both US and UK

(physical goods only, excludes travel, accommodation, tickets,

financial service products)

40% of online expenditure in Australia is to overseas sites

4

Inhibitors to growth and global threats

Key inhibitors include:

strong local physical store presence;

Lack of competition in postal / delivery services.

Global threats include:

Overseas websites targeting local consumers;

Marketplaces and tools powering other retailers.

Lack of presence by large retail chains - needed to kick-start market

5

Drivers of online purchasing

2%

12%

17%

29%

39%

0% 10% 20% 30% 40% 50%

Other

Easier to locate product I am looking for

More comprehensive range of goods

Convenience of shopping from home

Cheaper prices

Most important reason for purchasing online

Source: Frost & Sullivan, eCommerce Consumer Survey, 2010

6

Future spending intentions

62%

16%

21%

0% 10% 20% 30% 40% 50% 60% 70%

About the same

Less

More

Intention to spend more/less over next 12 months

Source: Frost & Sullivan, eCommerce Consumer Survey, 2010

7

Percentage of overseas purchases

11%

7%

13%

13%

56%

0% 10% 20% 30% 40% 50% 60%

>75%

>50% to 75%

>25% to 50%

10% to 25%

Less than 10%

Percentage of goods purchased from overseas websites

Source: Frost & Sullivan, eCommerce Consumer Survey, 2010

8

Drivers of overseas purchases

27%

2%

1%

2%

24%

44%

0% 10% 20% 30% 40% 50%

I dont purchase from overseas e-Commerce stores

Other

Purchasing for someone located overseas

Higher level of trust

Wider variety of goods

Cheaper goods

Main reason for purchasing from overseas websites

Source: Frost & Sullivan, eCommerce Consumer Survey, 2010

9

Most Popular Websites in Shopping and Classifieds

Most Popular Websites in Shopping and Classifieds ranked by Visits - Month of May, 2010

All Sites (incl. International)

Rank Websites Domain Visits

1 eBay Australia www.ebay.com.au 27.12%

2 eBay www.ebay.com 3.47%3 Amazon.com www.amazon.com 1.98%4 Trading Post Online www.tradingpost.com.au 1.13%

5 hp www.hp.com 0.89%6 Ticketek.com www.ticketek.com.au 0.84%

7 Apple (Australia) www.apple.com/au 0.82%

8 eBay Motors Australia cars.ebay.com.au 0.76%

9 Gumtree Sydney sydney.gumtree.com.au 0.67%10 Rewards Central www.rewardscentral.com.au 0.67%

eBay is by far the most

popular shopping site

eBay Australia dominates but

some are shopping on eBay

internationally

No Australian retail chains are

in the top 10

Source: Experian Hitwise, May 2010

10

Forecasts, challenges and growth opportunities

Aus market predicted to grow from $12 billion in 2010 to $18 billion by 2014

Opportunities with differentiation in product or business model

Clothing, footwear, jewellery and accessories- strong growth will continue

Commodity items lacking differentiation – slower growth

Strategies for Multi-channel players:

in-store pick-up;

after sales service / exchanges;

click-to-chat;

flexible payment options.

459 491

587

0

100

200

300

400

500

600

700

AUS US UK

2010 per capita eCommerce spend ($US)

11

Time of week spent shopping online

58%19%

23%

Time of the week spent most time shopping for online

Both about the same

Weekends

Weekdays

Source: Frost & Sullivan, eCommerce Consumer Survey, 2010

12

Method used for Internet Purchases

1%

2%

6%

15%

35%

42%

0% 5% 10% 15% 20% 25% 30% 35% 40% 45%

Other (please specify)

Credit / debit card (at point of delivery)

Bank / Money transfer

Debit Card (via Internet)

Credit card (via Internet)

PayPal

Payment method used to make most Internet purchases in prior 12 months

Source: Frost & Sullivan, eCommerce Consumer Survey, 2010

13

Pre-purchase considerations

5%

6%

7%

7%

57%

59%

64%

0% 10% 20% 30% 40% 50% 60% 70%

None

Other

Vertical speciality site / portal

Online directory

Price comparison website

Product review site

Search engine

Sites typically visited before making a purchasing decision

Source: Frost & Sullivan, eCommerce Consumer Survey, 2010

14

Impact of online advertising

25%

75%

Have you purchased online after clicking on an ad in the last 12 months?

Yes

No

Source: Frost & Sullivan, eCommerce Consumer Survey, 2010

15

Negative online shopping experiences

55%

2.5%

6%

12%

14%

15%

18%

0% 20% 40% 60%

None

Credit card / debit card number was stolen.

Never got the item I ordered.

Merchandise was different than represented.

Had difficulty finding what I was looking for.

Difficulty contacting store for query/problem.

The item arrived too late.

Negative online shopping experiences in the last 12 months

Source: Frost & Sullivan, eCommerce Consumer Survey, 2010

16

In Conclusion…..

• Aus market will grow from $12 billion to $18 billion by 2014

• Significant lag behind US and UK markets

• Lack of presence by large retail chains - needed to kick-

start market

• Opportunities with differentiation in product or business

model