Is Online Competition Growing in Australia?
When it comes to ecommerce, Australia sits just outside the top ten in terms of market value. Between now and 2024, revenue is expected to grow by around 15% per year until it exceeds US$32 billion. According to the latest estimates, ecommerce now accounts for just under 10% of all retail trade in Australia. But what do these numbers mean on the ground level? Is online competition growing?
The Impact of the Pandemic
First, it’s impossible to review the state of the ecommerce market in Australia without considering the pandemic. With stay-at-home orders and various lockdowns, online shopping became a necessity rather than an option. Not only did we turn to the internet for our groceries, but we also bought items to keep kids (and adults!) entertained during the difficult time.
Who knows what would have happened if the pandemic didn’t come in 2020? However, here we are, and consumer habits have changed dramatically. In a recent Statista survey, nearly 40% of respondents said that they’re motivated to help local businesses overcome the pandemic. Meanwhile, just over one in five noted that better deals are easier to find online compared to traditional brick-and-mortar stores.
Read More: Has the Pandemic Changed the Way Australians Spend and Live?
Elsewhere, 15% of people said that they started shopping on the internet as a direct result of the pandemic. Just when we thought that people couldn’t spend any more time online, they have been forced to just to buy products. Another study recently suggested that half of all people who started to buy groceries online through the pandemic will not go back to physical stores. Consumers love the convenience, and they prefer to stay safe at home rather than spending time close to dozens of strangers.
Growth in Online Competition
To answer the question posed in the title, online competition is growing as barriers to entry continue to subside. Websites like eBay Australia and Amazon Australia make it easier for anybody with a dream to sell products. However, people don’t even need a dream, just an idea and an internet connection.
According to predictions, 200,000 new shoppers entered the world of online shopping back in April 2020. The country might be moving closer to safety with regards to coronavirus, but these are 18-month habits that won’t just undo themselves overnight. As demand for online services increases, so too does the gap for new services.
In 2021, sellers rely on a cross-channel approach to sell to consumers. For example, here are five of the biggest channels for digital marketing:
- Amazon
Notice the theme between all these channels? They’re all free. Sure, you can pay for advertising. But none of these platforms charge a fee to get started. The same is true for marketplaces, so sellers can get started with a strategy for very little money. Gone are the days where you would have to rent a physical store, hire employees, and get lots of posters and leaflets made up.
With demand for online services increasing and the barriers to entry disappearing, this is creating the conditions for increased competition. New services are continually entering the market, and brands that were traditionally physical stores are also changing their strategy with online stores.
The ACCC to Monitor Marketplaces and Competition
While the pandemic has encouraged the switch to online shopping, many experts believe that Australia was already on a path to this destination anyway. Either way, the Australian Competition and Consumer Commission (ACCC) has announced its intentions to monitor online retail marketplaces.
According to the announcement, some key services will go under the microscope including:
- Kogan
- eBay Australia
- Catch.com.au
- Amazon Australia
During the investigation, the ACCC will take submissions from platforms, sellers, consumers, and others to learn as much as possible. For example, it has set up a short online survey for small business owners and consumers who want to comment on the current industry.
In recent years, the number of sellers on such marketplaces has expanded rapidly, and the ACCC wants to explore concerns from both a consumer and competition perspective. As well as marketplaces competing against one another, they also compete against the traditional, physical stores.
How do online marketplaces affect competition in Australia? This is the goal of the ACCC report, and it will be interesting to see what it finds. With online sales growing by nearly 60% in 2020 compared to the year before, the report comes at the right time. Last year alone, consumers in Australia spent $50 billion through online avenues.
Rod Sims, Chair of the ACCC, said that the online world is just impossible to ignore in 2021. With the pandemic accelerating the shift online, it’s important to know all about this growing segment and how it affects the wider Australian market. Sims went on to say that the online market needs to be held to the same high standards as the traditional retail market.
As a result, the ACCC will consider the terms and conditions by which third-party sellers must abide when using online marketplaces. What’s more, it will also look at the use of data in addition to pricing practices. Ultimately, the goal for the ACCC is to ensure that the digital retail world offers a fair and just experience for all consumers as well as all businesses.
Sims stated that the review system for sellers and products will also be assessed as part of the report. Can customers leave reviews for products? Will other customers see these reviews? Can customers read ALL reviews rather than cherry-picked ones? Additionally, this also includes an assessment of how marketplaces and sellers handle complaints.
Finally, Sims noted the benefits of online shopping for consumers. He praised the variety and choice available to all customers, but he wants to make sure that consumers and businesses have a fair experience rather than being forced to trade convenience for unfair competition and other unjust systems.
How to Stand Out in the Modern Competitive Environment
Is online competition growing in Australia? Yes, and the pandemic has accelerated the trend. Before the pandemic, people with a dream and a laptop were recognizing their opportunities. Now, up-and-coming business owners have even more reason to give online selling a go.
- They’ve loved spending time with family during the pandemic and want to adopt this lifestyle permanently.
- The fact that more people are spending online has opened doors for new sellers. Consumers aren’t just spending more time online, but they’re also willing to buy from lesser-known brands.
- The barriers to entry are small — drop shipping businesses, for example, can begin with items that most people have in their homes already. This includes a laptop, internet connection, and perhaps a notepad and pen to plan.
In truth, it’s the best time to enter the market as a business…and the worst. What do we mean? Well, the barriers to entry are small, but this doesn’t just apply to you. It applies to everybody else with the same dream. The same day that you launch your business, you can’t guarantee that 50 others aren’t doing the same thing.
Read More: The Fastest-Growing Industries in Australia
With this, you need to learn how to stand out. You need to learn how to position your business so that consumers see you as one of the best options (if not the best option!). If you follow the crowd, you’re not ever going to be anything other than just another name. Therefore, we’re going to finish with some short tips for businesses entering the competitive Australian market in 2021.
- Offer something different. It might sound simple, but the problem with many online and physical brands is that they don’t offer anything unique. Imagine customers discovering your brand online — why should they choose you over every other business?
- Take advantage of modern technology. We know it’s hard, but you need to relinquish some control every so often. If you insist on doing everything alone, from social media advertising to accounting, you won’t find time in the day to grow the business. Utilize AI, introduce machine learning, and outsource certain tasks to make your life easier.
- Be willing to understand your audience. Basic understanding just isn’t enough in 2021, you need to embark on a mission that will see you understand your audience better than every other service. Once again, use machine learning and AI to boost your understanding.
- Use consistent branding. The example is used in many branding guides online but think about Coca-Cola. When hearing the brand name alone, you picture the logo, the color, and various other details. The reason this happens is thanks to the many years of intense branding from the company. You’ll see the logo and red theme on all leaflets, products, company vehicles, billboards, TV ads, social media channels, and more. If you want to become a known company, pay attention to branding and use the same themes everywhere that the brand is present.
Read More: The Continuation of COVID and the Impact on Jobs in Australia
Online competition is growing, but there’s evidence to suggest that Australian consumers like to stick with Australian companies, so take advantage of this!
