Mary Meeker has published her latest report about how consumers shop, global e-commerce. This quick summary of her research focuses on the key consumers trends in global e-commerce. This report should be of interest to Australian businesses as Australia tends to follow trends overseas trends. Some key trends to for Australian businesses to consider are …
Better, faster, cheaper
For many years the number of people accessing the internet and purchasing devices, such as Smartphones, to access the internet has steadily grown. Now approx. 50% of the world has access to the internet but the growth rate of new users is declining (source slide 7). In the US, people with access to the internet are spending more time online now (source slide 11). Now the market is starting to mature and it will be harder for businesses to achieve growth and it is likely competition will increase as businesses fight for market share. For example, from 2016 to 2017 there was no growth in the number of Smartphones shipped and the average price achieved declined (source slide 6, 15). Strong growth rates are still being achieved in new technology, e.g. Wi Fi usage, but many new devices are better, faster and cheaper. The key message for Australian businesses is that the online industry is maturing and now, to be competitive, your product or service has to be better than before, faster (easier) to purchase and also cheaper.
Consumers research and buy online
Consumers estimate that 60% of payments (not $ sales) now occur online (source slide 18). This result could be influenced due to the number of mobile payment users in China growing from approx. 50M to approx. 550M in the last 5 years (source slide 19). In Australia, with increasing usage of online banking and mobile phones, it is also logical the % of payments made online is increasing.
Consumers are more likely to research and maybe a product or service online today. A US study of 2,000 US consumers highlighted that they begin their e-commerce product search firstly at Amazon (49%), then search engines (36%, e.g. Google) and finally other (15%) (source slide 62). Another US study of 1,000 US consumers, discovered that 55% of people bought a product online after social media discovery (source slide 71). The same study highlighted that for US respondents aged 18 to 34, the top 3 social media sites for product discovery were Facebook (78% respondents), then Instagram (59% respondents) and Pinterest (59% respondents) (source slide 71). As consumers buying behaviour has changed so has the advertising spend of businesses. In the US, internet advertising spend has increased from $37B to $88B in the last 5 years (source slide 97). So Australian businesses need to promote their products or services with their own website (for search engines) and on the appropriate social media platform for your target market. The major issue Australian businesses will face is the increasing costs of SEM (search engine marketing, e.g. Facebook Ads) and declining ROI from this form of advertising (source slide 75).
Online sales are still achieving strong growth. For example, e-commerce sales in the US have grown more than 10% every year for the last 5 years, from $225B to $425B (source slide 45). e-commerce sales in the US have grown from 8% of total sales to 13% of total sales in the last 5 years (source slide 46). Consumer research suggests a lot of this e-commerce sales growth is being achieved by retailers offering a better integrated service online. For Australian businesses this means you need to ensure that all steps in the online buying process (from search to delivery) work seamlessly together to maximise e-commerce sales.
Rise of subscription based pricing
Another rising trend in sales is subscription based pricing in e-commerce (source slide 81). Historically e-commerce services were based on a fee, e.g. pay $x to watch a movie, but today services, such as Netflix, offer subscription based pricing, so customers pay a monthly fee to access the service. Other examples include Spotify and newspapers charging a monthly fee to access their service.
Video usage growing
There is an increasing use of video online today. For example, Global Daily Mobile Video Viewing has increased from approx. 5 to approx. 30 minutes in the last 5 years (source slide 23). Historically sites such as YouTube focused on video but now other sites including Facebook and LinkedIn are preferring video posts / comments. For most Australian businesses you should consider promoting your goods or services online with a video.
Due to advances in technology modern businesses are now able to collate and manage more data than ever before. ‘Big data’ can be a source of improved customer satisfaction (souce slide 191) by offering improved personalised experiences online (souce slide 192) and is used by businesses such as Amazon today (source slide 197). With on-going improvements in technology, such as AI, theoretical businesses could offer a even better personalised online experience. The issue today is consumers have concerns about how their personal data is used. This has led to consumers changing their online behaviour because they do not ‘trust’ some online businesses. For example consumer research with 1,538 US consumers discovered that some had deleted / avoided certain apps (64%) and others had adjusted their mobile privacy settings (47%) through to some not buying a certain product (9%) (source slide 206). Due to privacy concerns legislators have also changed the rules, for example the EU GDPR (General Data Protection Regulation) (source slide 209). The key issue for Australian businesses is how you collect your customers personal data (ensure legal compliance) and then how this data is used to build better relationships with your customers, based on trust.
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