The increasingly prevalence of smartphone and tablet use is changing the industry's operating environment.
Melbourne, Australia (PRWEB) February 05, 2014
The Online Shopping industry has changed the face of the Australian retail sector, representing a paradigm shift in the way consumers make transactions. While the industry is in its infancy, both technologically and financially, it has grown dramatically over the past five years to become part of the mainstream retail industry. IBISWorld industry analyst Lauren Magner states "the rise of the industry has been aided by the rapid growth in internet and broadband penetration, combined with an acceptance of electronic commerce as a viable and safe alternative to traditional bricks-and-mortar retailing." The industry has benefited from consumers seeking choice and value, particularly as discretionary spending and overall consumer sentiment have declined. The online space offers unprecedented choice, as there are no geographical boundaries and prices are highly competitive. Industry revenue is expected to grow by an annualised 24.1% over the five years through 2013-14 to $12.4 billion. In 2013-14, the industry is forecast to increase by 11.3%.
Industry profitability has remained at a stable level, despite a strong increase in total revenue. The start-up and maintenance costs for major online websites has kept profit margins low, as have the high levels of competition within the industry. However, for small operators, the cost of setting up a website can be minimal. As a result, there has been a significant influx of new entrants into the industry over the past five years, with enterprise numbers growing at an annualised 16.3%. As online retail becomes increasingly normalised, revenue growth is expected to temper over the next five years. Regional areas will be able to access faster and more-secure internet connections through the rollout of the National Broadband Network. This will substantially increase the industry's potential consumer base. According to Magner, "the growth of online retailing through smartphones and tablets will provide further opportunities for operators to enhance products and services and reach a wider, technologically savvy audience." An increasing number of bricks-and-mortar retailers will migrate online to complement traditional offerings. Industry revenue will also be boosted as older Australians become increasingly computer literate. Furthermore, the ongoing recovery of the global economy will bode well for the retail sector in general.
The Online Shopping industry is characterised by a low level of market share concentration. The industry’s major players, Wesfarmers and Woolworths, have significant influence over the market and a large customer base. However, the industry also consists of a large number of smaller, independent operators. Although these larger companies have been expanding their online presence rapidly over the past five years, substantial market share gains have been offset by the multitude of new operators entering the industry. Concentration is set to strengthen over the next five years, as retailers consolidate their operations in response to intensifying competition. For more information, visit IBISWorld’s Online Shopping report in Australia industry page.
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IBISWorld industry Report Key Topics
Retailers in this industry operate websites that enable consumers to purchase a broad array of products, such as apparel, computers, recorded music, electronic goods, general merchandise and groceries. Industry participants are either pure-play online retailers or bricks-and-mortar stores that have an online presence. The industry does not include the sale of goods or services by agents that do not take ownership of the goods and services, or the sale of goods by individuals.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Basis of Competition
Barriers to Entry
Technology & Systems
Regulation & Policy
About IBISWorld Inc.
Recognised as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every Australian industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Melbourne, IBISWorld serves a range of business, professional service and government organisations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com.au or call (03) 9655 3886.