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Will a Return to Travel Halt E-Commerce Growth?
Travel has been off the cards for some time now, and a result of this has been an enormous influx of online shopping, even as Australia says goodbye to lockdowns and restrictions. But what will happen when travel resumes? Will e-commerce remain the way it is, reach new levels or fall by the wayside?
Travel was an option that was well and truly off the table in 2020 and saw a 52 percent drop YoY as a result.
In the latest Trajectory report from Power Retail, the majority of Australian consumers (93 percent) said they are open to booking a domestic holiday in the coming months.
In contrast, 22 percent said they’d be less likely to book a domestic flight in the next few months.
With international flights off the table, many shoppers have turned to spend savings on consumer electronics such as TVs; updating their home computers and renovating their homes while in lockdown has become the alternative to spending savings on flights and accommodation overseas.
JB Hi-Fi recorded record sales during HY21, with CEO Richard Murray citing the lack of international travel driving the increase in online spending.
“The reality is that a lot of people won’t want to travel,” he told the AFR. “While Australians can’t travel, there is a certain amount of money that stays in the local economy.”
According to a report from Hootsuite, a decrease in travel sales has sparked an increase in sales from other categories. Food and personal care experienced an increase of 41 percent YoY, with Fashion and Beauty also increasing by 27 percent YoY.
Revenue for Beauty and Fashion exceeded $516 billion in 2020, up by more than 40 percent compared to 2019.
This isn’t a purely Australian phenomenon. The report from Hootsuite has found that the pandemic has driven consumers to purchase more online than ever before. Nearly 77 percent of internet users aged between 16 to 64 say they now purchase something online every month.
“The Digital Report for 2021 demonstrates that the digital world we live in is being driven by the power and breadth of social, and accelerated by the pandemic, which is fundamentally transforming our personal and professional lives,” said Henk Campher, the VP of Corporate Marketing at Hootsuite.
So, what will happen when international travel comes back in full swing? With international travel this year remaining a ‘big open question’, it’s unclear whether Aussies will be jumping on a plane any time soon. “I think we will go most of this year with still substantial border restrictions,” shared Brendan Murphy, the Secretary of the Department of Health.
“Even if we have a lot of the population vaccinated, we don’t know whether that will prevent transmission of the virus and it’s likely that quarantine will continue for some time.”
Retailers have been delivering strong sales growth in the HY21. The Aussie spending spree is fully and clearly underway, with retailers such as JB Hi-Fi, Super Retail Group, Mosaic and MyDeal exceeding expectations after a tough 12 months.
JB Hi-Fi has reported an increase in online sales of 161.7 percent to $678.8 million, accounting for 13.7 percent of total sales.
Aussie marketplaces such as MyDeal have also experienced strong growth in 2020, and the first quarter of HY21, with consumers spending their money on improving their homes and gardens instead of travelling abroad.
MyDeal reported a 205 percent YoY increase in its active customers, hitting more than 800,000 as of 31 December 2020.
Furthermore, Amazon rival, Booktopia, has reported the strongest sales in December in its entire 16-year history.
“We are confident the momentum and growth we experienced in 2020 should continue throughout the year and beyond and as a result, the business is on track to meet forecasts provided in the company’s prospectus,” explained Tony Nash, the CEO of Booktopia.
So, when international travel hits, will Aussies stop spending so much online? The short answer is unlikely. While the sales may start to slow after months of exponential surges in growth, it’s unlikely that the spending spree is set to slow to what it was in 2019.
E-Commerce is expected to keep growing in 2021, and platforms such as TikTok, Facebook and Instagram will just add fuel to the fire.
The report from Hootsuite shows that there are now 4.2 billion social media users around the world, with 13 percent YoY growth. is accounts for more than 53 percent of the world’s total population.
Twenty-eight percent of users aged between 16 to 64 say that they are using social media to discover new brands and products, mostly via ads.
“With social media usage averaging close to two and a half hours per day, 37 percent of internet users looking to social media to stay updated on news, brand discovery finding its home on social over search engines, and two in five professionals using social media for work purposes, brands have never had more incentive to authentically connect with their target audiences through relevant channel,” said Campher.
So, it’s safe to say that online spending isn’t going to slow any time soon, especially with the conscious increase in social media spend.
“Every year for the last decade, we’ve seen growth in the penetration of social and digital, and last year was only different in that the growth rate was even steeper than the year before,” explained Suzie Shaw, the Managing Director of We Are Social.
“The other notable shifts in Australia were the growth in penetration of online shopping and social gaming; two areas for brands to explore and master, if they haven’t already.”
Retailers need to remember that the e-commerce boom is far from over. Investing in a robust digital strategy for 2021 and beyond is no longer a side job – it’s imperative for businesses to succeed in a highly competitive market.
Overall time online has increased in 2020, with the average internet user spending almost even hours a day accessing the internet across all devices.
Older shoppers are the fastest-growing segments among some of the world’s top social media platforms, highlighting an opportunity for retailers to connect with older shoppers and better understand their shopping habits online.
“It’s no surprise that in a year where many people all over the world spent weeks and months in lockdown, we’ve seen massive growth in social media and internet users,” said Nathan McDonald, the Co-Founder and Group Chief Executive of We Are Social.
“Much of our lives are now being played out through digital channels, whether that’s connecting on social media, shopping on mobile, using voice, installing smart devices or playing online games. The pandemic has accelerated a shift that had already begun, and 2021 is shaping up to continue in this vein. For marketers, understanding how to connect in culturally relevant ways with online audiences will be more crucial than ever.”