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X0004 Online Shopping in Australia Industry Report
X0004 Online Shopping in Australia Industry Report
X0004 Online Shopping in Australia Industry Report
Lauren Magner
21 Competitive Landscape
Industry Definition
Main Activities
Similar Industries
Additional Resources
23 Basis of Competition
23 Barriers to Entry
4 Industry at a Glance
24 Industry Globalisation
5 Industry Performance
25 Major Companies
Executive Summary
25 Wesfarmers Limited
26 Woolworths Ltd
Current Performance
Industry Outlook
28 Operating Conditions
28 Capital Intensity
29 Technology & Systems
29 Revenue Volatility
13 Supply Chain
30 Industry Assistance
15 Demand Determinants
16 Major Markets
32 Key Statistics
17 International Trade
32 Industry Data
19 Business Locations
32 Annual Change
32 Key Ratios
WWW.IBISWORLD.COM.AU
Main Activities
Similar Industries
WWW.IBISWORLD.COM.AU
Similar Industries
continued
Additional Resources
IBISWorld
WWW.IBISWORLD.COM.AU
Industry at a Glance
Online Shopping in 2013-14
Key Statistics
Snapshot
Revenue
Profit
Wages
Businesses
$12.4bn 24.1%
9.9%
38,594
$481.7m $2.5bn
Internet connections
Market Share
Wesfarmers
Limited 9.9%
50
20
40
15
30
% change
% change
Woolworths Ltd
8.7%
20
10
5
10
0
Year 06
08
Revenue
10
12
14
16
18
20
Year
07
09
11
13
15
17
19
Employment
SOURCE: WWW.IBISWORLD.COM.AU
p. 25
Revenue
6.8%
SA
Real household
discretionary income
Consumer
sentiment index
1.2%
2.3% 2.1%
ACT
NT
TAS
33.2%
NSW
11.5%
WA
Demand from
department stores
Median age of the
population
19.3%
QLD
23.6%
p. 5
VIC
SOURCE:
WWW.IBISWORLD.COM.AU
SOURCE:
WWW.IBISWORLD.COM.AU
Industry Structure
Growth
High
Medium
Regulation Level
Medium
Technology Change
Medium
Barriers to Entry
Industry Assistance
Low
Industry Globalisation
Concentration Level
Low
Competition Level
FOR ADDITIONAL STATISTICS AND TIME SERIES SEE THE APPENDIX ON PAGE 32
Low
Medium
High
WWW.IBISWORLD.COM.AU
Industry Performance
Internet connections
The number of internet connections is of
particular relevance to the industry. With
increased internet penetration,
particularly in regional areas, the number
of consumers able make transactions
online will increase, boosting revenue for
industry participants. Increased
consumer confidence with shopping
online is also expected to affect the
frequency and amount of goods
purchased. In 2013-14, the number of
internet connections in Australia is
expected to increase, creating an
opportunity for online retailers to further
increase sales.
WWW.IBISWORLD.COM.AU
Industry Performance
20
15
15
10
% change
% change
Internet connections
10
5
0
Year
5
0
07
09
11
13
15
17
19
Year
08
10
12
14
16
18
20
SOURCE: WWW.IBISWORLD.COM.AU
Current
Performance
WWW.IBISWORLD.COM.AU
Industry Performance
Geographical trends
Employment,
enterprises and
profitability
WWW.IBISWORLD.COM.AU
Industry Performance
Purchasing decisions
Evolving technology
influenced by trust,
reputation, warranties and
add-on services
transparency with regard to delivery
charges and enhanced information
about products, with most retailers
willing to cater to these requests.
WWW.IBISWORLD.COM.AU
Industry Performance
Industry
Outlook
Increasing
competition
Improved internet
connections
Industry revenue
50
% change
40
30
20
10
0
Year 06
08
10
12
14
16
18
20
SOURCE: WWW.IBISWORLD.COM.AU
WWW.IBISWORLD.COM.AU
10
Industry Performance
Expansion of
customer base
Growth potential
WWW.IBISWORLD.COM.AU
11
Industry Performance
The rise in store numbers is characteristic of an
industry in the growth phase of its life cycle
20
Maturity
Quality Growth
Company
consolidation;
level of economic
importance stable
15
Online Shopping
10
Quantity Growth
Liquor Retailing
Courier Pick-up and Delivery Services
Supermarkets and Grocery Stores
Houseware Retailing
Decline
-5
Shrinking economic
importance
-10
-10
-5
10
15
20
WWW.IBISWORLD.COM.AU
12
Industry Performance
industry
is G
rowing
WWW.IBISWORLD.COM.AU
13
Supply Chain
Consumers in Australia
Australian consumers represent the major market for online retailers.
Wholesale Trade
Wholesalers supply a range of merchandise including food, wine, clothing, computers, sporting
equipment and cosmetics, all of which may be purchased via the internet.
I5102
J5911
6.5%
1.2%
Other goods
20.6%
11.7%
Recreational goods
12.2%
18.3%
13.1%
Total $12.4bn
16.4%
WWW.IBISWORLD.COM.AU
14
home-labelled electronics.
Demand for TVs, DVD players and
other electronic goods has been strong
over the past five years, as new models
are released frequently. Many households
in Australia have more than one TV,
therefore leading to repeat purchases. A
large number of consumers are choosing
to purchase these products online due to
the growing reputation of many online
retailers in this segment.
Software and apps are also included in
this segment. There has been significant
growth in the sale of apps for smartphones
and tablets as the number of consumers
owning these devices increases. Software
purchases are generally for game consoles,
handheld gaming devices and PCs, and
antivirus software.
Groceries and liquor
Groceries and liquor account for an
estimated 13.1% of goods sold by the
industry and have grown as a share of
revenue over the past five years as
consumer demand strengthens. An
increase in the number of women
returning to the workforce, busy workhome lifestyles and time constraints have
led consumers to adopt alternative means
of grocery shopping. This segment also
includes the sale of wine and vitamin
supplements. The sale of wine through
sites like Grays Online and Catchoftheday
has proven both popular with consumers
seeking a bargain and suppliers looking
to clear excess stock. The sale of dietary
supplements has boomed as older
Australians look to boost vitamin intake
and Australians seek new ways to lose
weight. The vitamin and supplement
market is highly fragmented, with dozens
of websites offering discounted vitamins.
Printed material, music and movies
Published media accounts for 12.2% of
revenue and includes books, magazines,
music, ringtones and videos. This product
segment has grown solidly over the past
five years, with consumers in younger age
groups accounting for a significant
proportion of sales. Apple has become a
major operator in the segment through its
WWW.IBISWORLD.COM.AU
15
Demand
Determinants
Recreational goods
Toys, games, sporting equipment and
hobby items account for 11.7% of industry
sales. This segment has grown strongly
over the past five years as consumers
become more confident with purchasing
these goods online. For consumers who
lead busy lives, the convenience of
purchasing these products online and
having them delivered, has facilitated
demand within this segment.
Other goods
Other products include furniture,
flowers, hardware, plants, building
materials, office equipment, stationery,
automotive parts, aviation parts and art.
The sale of flowers is the oldest subsegment, with consumers able to log on
to florist websites to order flowers for
many years. Because of its maturity, this
sub-segment is growing slower than
other goods in the segment.
WWW.IBISWORLD.COM.AU
16
Demand
Determinants
continued
Major Markets
WWW.IBISWORLD.COM.AU
17
Major Markets
continued
23.4%
17.0%
17.7%
22.8%
Total $12.4bn
International Trade
19.1%
SOURCE: WWW.IBISWORLD.COM.AU
WWW.IBISWORLD.COM.AU
18
International Trade
continued
WWW.IBISWORLD.COM.AU
19
NT
1.2
QLD
19.3
WA
11.5
SA
6.8
NSW
33.2
ACT
2.1
VIC
23.6
Revenue (%)
Cold Zone (<10)
<25
<50
Hot Zone (<100)
Not applicable
TAS
2.3
SOURCE: WWW.IBISWORLD.COM.AU
WWW.IBISWORLD.COM.AU
20
WA
VIC
TAS
SA
QLD
NT
NSW
0
ACT
Percentage
Business Locations
Revenue
Population
SOURCE: WWW.IBISWORLD.COM.AU
WWW.IBISWORLD.COM.AU
21
Competitive Landscape
in
this industry is L ow
identifies
250 Key Success
Factors for a
business. The most
important for this
industry are:
Cost Structure
Benchmarks
WWW.IBISWORLD.COM.AU
22
Competitive Landscape
Purchases
Similar to bricks-and-mortar retailing,
purchases represent the largest expense
for the industry, accounting for 61.4% of
revenue in 2013-14. Online retailers
purchase goods from wholesalers or
direct from manufacturers, and then sell
these products to consumers. Large
companies are able to use their size and
economies of scale to secure competitive
contracts with suppliers. Over the past
five years, purchase costs have been
declining, largely due to an increasing
amount of stock that is being sourced
from low-cost factories in countries such
as China and India. A significant
proportion of industry players have
established links with overseas suppliers
and the strength of the Australian dollar
has led to lower import prices, further
reducing purchase costs.
Wages
Wages are the second-largest expense for
online retailers, accounting for 20.5% of
industry revenue in 2013-14. Staff are
required to set-up and maintain web
Rent
Representing 2.5% of industry revenue,
rent costs have increased moderately
over the past five years due to the
natural rise in prices and continued
4.4
1.2
80
Percentage of revenue
Cost Structure
Benchmarks
continued
5.0
8.4
11.3
Industry Costs
(2013-14)
1.1
2.5
3.9
2.6
7.8
20.5
60
40
68.5
1.3
Profit
Rent
Utilities
Depreciation
Other
Wages
Purchases
61.4
20
0
SOURCE: WWW.IBISWORLD.COM.AU
WWW.IBISWORLD.COM.AU
23
Competitive Landscape
Cost Structure
Benchmarks
continued
Basis of Competition
in
this industry is
Highand the trend
is I ncreasing
Barriers to Entry
Level & Trend
arriers to Entry
B
Other costs
Other costs include advertising,
depreciation, insurance, administration,
accounting and transportation
expenses. Other costs are estimated to
account for 7.8% of industry revenue
in2013-14.
Internal
The ease of price comparison between
retailers offering similar products has
meant price competitiveness is arguably
the key battleground online. Consumers
will typically search online for the best
value and retailers that are able to offer
lower prices will attract increased
demand. In addition, retailers that offer
free delivery will have an advantage over
those that charge for shipping.
The more abstract nature of online
retailing means the reputation of the
seller is also very important. Companies
compete based on the prominence of
their branding, warranties, after-sales
service, delivery times, transaction
External
The industry faces external competition
from traditional bricks-and-mortar
retailers. Although online stores are able
to boast lower prices and 24/7 shopping,
shopfront retailings advantages, such as
the ability for customers to physically
inspect products, face-to-face customer
service, higher perceived security and the
capacity to instantly acquire products,
are the major points upon which
traditional retailers compete with their
online counterparts.
As consumers continue to search for
bargains online, many individuals may
choose to purchase from overseas
websites. Large international retailers
typically enjoy price and efficiency
advantages due to economies of scale. As
a result, foreign online operators are
generally able to offer lower prices than
domestic retailers and the strong
Australian dollar over the past five years
has further encouraged consumers to
shop on overseas websites.
WWW.IBISWORLD.COM.AU
24
Competitive Landscape
Barriers to Entry
continued
Industry
Globalisation
Level & Trend
lobalisation
G
in
this industry is
Mediumand the
trend is I ncreasing
Level
High
Low
Growth
Medium
Medium
Medium
Low
SOURCE: WWW.IBISWORLD.COM.AU
WWW.IBISWORLD.COM.AU
25
Major Companies
Major players
(Market share)
81.4%
Other
Player Performance
Wesfarmers Limited
Market share: 9.9%
Industry Brand Names
Coles
Kmart
Officeworks
Target
Liquorland
Vintage Cellars
First Choice Liquor
SOURCE: WWW.IBISWORLD.COM.AU
Revenue
($ million)
(% change)
2008-09
142.2
N/C
2009-10
223.9
57.5
2010-11
426.5
90.5
2011-12
697.4
63.5
2012-13
984.7
41.2
2013-14
1,227.9
24.7
*Estimate
SOURCE: IBISWORLD
WWW.IBISWORLD.COM.AU
26
Major Companies
Player Performance
Woolworths Ltd
Market share: 8.7%
Industry Brand Names
Big W
Woolworths
Dan Murphys
Cellarmasters
Masters Home
Improvement
Revenue
($ million)
(% change)
2008-09
118.8
N/C
2009-10
188.9
59.0
2010-11
307.9
63.0
2011-12
600.4
95.0
2012-13
852.6
42.0
2013-14
1,074.3
26.0
*Estimate
SOURCE: ANNUAL REPORT AND IBISWORLD
WWW.IBISWORLD.COM.AU
27
Major Companies
Other Companies
Catchoftheday.com.au
Booktopia
iTunes
Wishlist.com.au
WWW.IBISWORLD.COM.AU
Operating Conditions
of capital
intensity is M
edium
Capital intensity
Economy
Information, Communications,
Mining, Finance and Real
Estate. To increase revenue
firms need superior debt
management, a stable
macroeconomic environment
and a sound investment plan.
Capital Intensive
Labour Intensive
Online Shopping
Courier Pick-up and
Delivery Services
Houseware Retailing
Liquor Retailing
Supermarkets and Grocery Stores
Domestic Appliance Retailing
Old Economy
Agriculture and Manufacturing.
Traded goods can be produced
using cheap labour abroad.
To expand firms must merge
or acquire others to exploit
economies of scale, or specialise
in niche, high-value products.
SOURCE: WWW.IBISWORLD.COM.AU
WWW.IBISWORLD.COM.AU
Operating Conditions
Revenue Volatility
Level
The level
of
Volatility is H
igh
Volatility vs Growth
1000
Level
The level
Hazardous
Rollercoaster
100
Online Shopping
10
1
0.1
Stagnant
30
10
Blue Chip
10
30
50
70
WWW.IBISWORLD.COM.AU
Operating Conditions
Revenue Volatility
continued
Regulation is
Mediumand the
trend is S
teady
Industry Assistance
Level & Trend
he level of
T
Industry Assistance
is L owand the
trend is S
teady
WWW.IBISWORLD.COM.AU
Operating Conditions
Industry Assistance
continued
WWW.IBISWORLD.COM.AU
32
Key Statistics
Industry Data
2004-05
2005-06
2006-07
2007-08
2008-09
2009-10
2010-11
2011-12
2012-13
2013-14
2014-15
2015-16
2016-17
2017-18
2018-19
Sector Rank
Economy Rank
Revenue
($m)
1,843.2
2,376.9
2,979.9
3,492.3
4,193.2
5,982.5
7,785.0
9,091.2
11,097.6
12,350.0
13,988.0
15,550.0
16,975.0
18,220.0
19,832.2
10/17
105/688
Annual Change
2005-06
2006-07
2007-08
2008-09
2009-10
2010-11
2011-12
2012-13
2013-14
2014-15
2015-16
2016-17
2017-18
2018-19
Sector Rank
Economy Rank
Revenue
(%)
29.0
25.4
17.2
20.1
42.7
30.1
16.8
22.1
11.3
13.3
11.2
9.2
7.3
8.8
2/17
32/688
Industry
Value Added
($m)
Establishments
577.3
9,402
712.1
11,290
893.1
14,141
1,036.2
16,409
1,216.0
19,994
1,773.2
26,277
2,195.4
32,329
2,526.4
37,055
2,946.6
40,687
3,334.5
43,225
3,655.4
47,898
4,120.8
49,760
4,428.8
53,283
4,702.6
55,645
5,229.8
62,802
10/17
7/17
107/688
26/688
Enterprises
8,659
10,420
12,967
15,111
18,177
23,888
29,125
33,085
36,655
38,594
42,388
44,429
47,153
49,243
55,089
5/17
15/687
Employment
11,344
13,546
16,987
20,400
24,720
32,249
39,610
44,996
50,950
53,259
58,495
62,200
66,014
69,433
77,125
10/17
75/688
Exports
---------------N/A
N/A
Imports
---------------N/A
N/A
Wages
($m)
462.6
560.9
706.2
806.7
943.5
1,370.0
1,697.1
1,927.3
2,238.5
2,531.8
2,751.8
3,125.6
3,327.1
3,516.5
3,926.8
10/17
83/688
Domestic
Demand
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Industry
Value Added Establishments
(%)
(%)
23.4
20.1
25.4
25.3
16.0
16.0
17.4
21.8
45.8
31.4
23.8
23.0
15.1
14.6
16.6
9.8
13.2
6.2
9.6
10.8
12.7
3.9
7.5
7.1
6.2
4.4
11.2
12.9
1/17
2/17
32/688
37/688
Enterprises
(%)
20.3
24.4
16.5
20.3
31.4
21.9
13.6
10.8
5.3
9.8
4.8
6.1
4.4
11.9
3/17
45/687
Employment
(%)
19.4
25.4
20.1
21.2
30.5
22.8
13.6
13.2
4.5
9.8
6.3
6.1
5.2
11.1
4/17
77/688
Exports
(%)
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Imports
(%)
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Wages
(%)
21.2
25.9
14.2
17.0
45.2
23.9
13.6
16.1
13.1
8.7
13.6
6.4
5.7
11.7
1/17
19/688
Domestic
Demand
(%)
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Key Ratios
2004-05
2005-06
2006-07
2007-08
2008-09
2009-10
2010-11
2011-12
2012-13
2013-14
2014-15
2015-16
2016-17
2017-18
2018-19
Sector Rank
Economy Rank
IVA/Revenue
(%)
31.32
29.96
29.97
29.67
29.00
29.64
28.20
27.79
26.55
27.00
26.13
26.50
26.09
25.81
26.37
13/17
448/688
Imports/Demand Exports/Revenue
(%)
(%)
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Revenue per
Employee
($000)
162.48
175.47
175.42
171.19
169.63
185.51
196.54
202.04
217.81
231.89
239.13
250.00
257.14
262.41
257.14
10/17
432/688
Wages/Revenue
(%)
25.10
23.60
23.70
23.10
22.50
22.90
21.80
21.20
20.17
20.50
19.67
20.10
19.60
19.30
19.80
10/17
302/688
Employees
per Est.
1.21
1.20
1.20
1.24
1.24
1.23
1.23
1.21
1.25
1.23
1.22
1.25
1.24
1.25
1.23
16/17
661/688
Average Wage
($)
40,779.27
41,407.06
41,572.97
39,544.12
38,167.48
42,481.94
42,845.24
42,832.70
43,935.23
47,537.51
47,043.34
50,250.80
50,399.92
50,645.95
50,914.75
10/17
474/688
Share of the
Economy
(%)
0.05
0.06
0.07
0.08
0.09
0.13
0.16
0.17
0.20
0.22
0.23
0.25
0.26
0.28
0.30
10/17
107/688
SOURCE: WWW.IBISWORLD.COM.AU
WWW.IBISWORLD.COM.AU
33
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