E-commerce 'boom' slows, say NAB and Quantium, but oldies no longer scared of the internet

By Rachael Micallef | 9 September 2014

The initial “boom” of online shopping might be over, with growth continuing at a much slower pace, according to a report by Quantium for NAB.

NAB's July 2014 Online Retail Sales Index, reported that Australia's online retail spending increased by 8.6 per cent for the year to July 2014, but remains “considerably more subdued” than the 20-30 per cent growth rates recorded in previous years.

The report noted that while online continues to outperform traditional bricks and mortar retailers, its growth rates have been on a gradual decline.

Speaking to AdNews, Appliances Online COO Peter Harris said that while growth is still strong for the online retailer, it has felt a slowdown in sales.

“I guess because we were such a new company and we were experiencing phenomenal triple digit growth for the first few years, you can't really expect that continue. So we have definitely seen a slow down. The last 12 months to July we've seen about 15 per cent year-on-year growth,” Harris said.

While Harris believes the domestic retail market has a lot more scope to reach growth levels seen in the US and UK, he said Appliance Online is investing more heavily in its distribution and advertising to ensure growth continues.

“For the first time we've been doing some brand advertising. We've seen that more and more people are starting to come online and give online a try. It's becoming a more popular medium for shopping so we’ve started to broaden our reach in terms of advertising and go offline and build our brand - so that's certainly a way for us to bring more people to our site.”

However, despite the slowdown in growth rates, NAB group chief economist Alan Oster said that online retail growth was still outpacing offline retial, which had also seen a pick up in the past quarter.

The report also found that the number of over 65s using online retailing was increasing, which Oster said was “encouraging.”

Over 65s represent 18 per cent of the Australian population but only 8 per cent of total online purchases, although monthly growth by the demographic has increased by 11 months in a row.

Appliances Online's Harris said that was refelctive in the group's sales, and suggested pay on delivery services might have something to do with that growth as it quelled older people's fear of paying online.

“We're seeing a big uplift in the over 55-65 category," he said. "I think part of the reason for that is that now some of the bigger retailers are online and are pushing people online. They're more confident and they're no longer scared of online."

Download the full report here.

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