Small online retail businesses seeing double-digit growth as mobile sales surge.
A significant increase in sales via mobile devices over the past year is boosting the performance of online retail businesses, according to the latest research from the Commonwealth Bank.
The research shows that sales through mobile devices have risen significantly, increasing from 18 per cent of all online sales to 29 per cent in the past year, an average annual growth rate of 60 per cent.
This growth is supporting the expansion of smaller pure play online retailers with the number of businesses generating between $1 million and $10 million in annual turnover increasing by 133 per cent over the last 12 months. The proportion of online only retailers generating in excess of $10 million remains consistent at 20 per cent, with a smaller majority still generating less than $1 million (52 per cent).
Jerry Macey, National Manager Retail, Commonwealth Bank said: “The online retail industry in Australia is no longer limited to the larger dominant players. Smaller retailers continue to carve out market share.”
“Smaller online retail businesses are quickly achieving greater scale, with almost half now turning over more than a million dollars, and one in five generating revenue in excess of 10 million. They are bringing greater focus to targeting customers, and optimising existing channels rather than seeking to introduce new avenues to market.
“Competition remains strong as larger multi-channel competitors also enhance their online presence. Although the weaker dollar has made purchasing from overseas retailers a little less appealing in recent times, the competitive threat still remains.”
Booktopia CEO Tony Nash said, “Mobile browsing, traffic and indeed sales are very much on the increase for Booktopia. We’ve put a lot of emphasis on and expertise towards making sure our customer experience on a mobile platform is really good. Interestingly, we find the size of the consumer basket is always a little bit more for a desktop or tablet sale, because there’s only so much screen to work with on mobile. It tends to limit the ability to browse the site somewhat.”
A strong outlook for sales growth is underpinning confidence among online retailers, who remain substantially more optimistic than multi-channel businesses. Some 46 per cent of pure play online retailers had a positive view on business conditions over the next 12 months, compared with only 33 per cent of multi-channel retailers. For bricks and mortar only retailers, confidence levels were even lower, with only 26 per cent indicating a positive outlook.
The research also shows multi-channel retailers are more likely to be impacted by price sensitivity within their business compared with pure play online retailers. About 63 per cent of multi-channel businesses rated their price sensitivity as quite or very high while less than half of pure play retailers rate this at the same level.
Controlling prices across channels is likely to become increasingly important for retailers as digital sales grow. The research suggests consumers strongly dislike being asked to pay different prices on different channels, with 72 per cent agreeing it is important for retailers to set prices consistently. A quarter of retailers surveyed said they had difficulty controlling prices across channels and 23 per cent said they had trouble coordinating with different parts of their business.
Inside Small Business