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The $15 Billion Influence: How Physical Touchpoints Shape the Future of Australian Ecommerce

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By Published On: March 21, 20240 Comments

ShipStation and Retail Economics' Ecommerce Delivery Benchmark Report 2024 delves deep into the evolving dynamics of the Australian retail landscape, revealing the next ecommerce frontier.

In a groundbreaking revelation shedding light on the modern Australian consumer’s shopping journey, research conducted by ShipStation and Retail Economics has unearthed the profound impact of physical interactions on ecommerce sales. The report, titled the Ecommerce Delivery Benchmark Report 2024 delves deep into the evolving dynamics of the Australian retail landscape.

According to the findings, a staggering $15 billion, nearly half (48%), of Australian online non-food sales in 2023 were influenced by physical touchpoints. This discovery underscores the growing significance of omnichannel strategies, which seamlessly merge online and offline experiences to cater to the preferences of today’s discerning consumers.

David Boyer, VP, Head of ANZ at ShipStation, emphasised the transformative nature of these findings, stating, “The $15 billion figure paints a compelling picture of consumer behaviour, presenting a significant opportunity for brands to evolve their approach.

“Gone are the days of rigid classifications like ‘online’ or ‘offline’ shopping. Today’s informed consumer seamlessly navigates physical touchpoints like brick-and-mortar stores, social media discovery channels, and even embraces innovative solutions like AI-powered assistants to streamline tedious tasks like delivery and product research. This omnichannel journey is not merely a matter of convenience, but rather an opportunity to forge personalised connections that build enduring brand loyalty.”

The report not only underscores the enduring importance of traditional touchpoints like in-store browsing, but also sheds light on how social media platforms have emerged as the primary arena for product discovery among digital natives, with Gen Z and Millennials favouring platforms like TikTok and Instagram over traditional retailer websites. This shift in behaviour necessitates a recalibration of retail strategies to effectively engage with these demographics on their preferred platforms.

However, amidst these transformative changes, the report highlights the enduring importance of cost sensitivity among Australian consumers, particularly concerning delivery expenses. High shipping costs can deter a significant portion of consumers, with 71% indicating they are less likely to purchase from brands with exorbitant shipping fees, yet 66% are willing to pay for premium delivery services – highlighting the nuances across consumer groups.

Consumers are expressing significant desire for out-of-home returns. 31% of surveyed Australian consumers report a preference for in-store returns and 21% favour PUDO (pick-up/drop-off) locations. The research also reveals a distinct generational divide in the frequency of returns: across markets, Gen Z leads the pack, returning 19% of their apparel purchases on average.

While the debate around free returns persists, 65% of surveyed Australian consumers believe they should be free and not have any associated costs. Notably, across surveyed markets, half of Gen Zs are willing to pay for a quick and hassle-free return, making them three times more likely than Boomers (aged 65+) to do so. Ultimately, returns present a double-edged sword: 40% of surveyed Australian consumers report an inconvenient returns policy as a factor that would make them less likely to shop with a brand in the future. By embracing diverse, in-person return options, adopting a delivery ecosystem to address rising returns, and prioritising transparent policies, retailers can transform this potential churn point into a powerful customer retention tool.

Yet, amidst this challenge lies an incredible opportunity for retailers to turn the tide in their favour. By embracing a spectrum of in-person return options, establishing a robust delivery ecosystem to navigate the surge in returns, and placing transparency at the forefront of their policies, retailers hold the key to transforming this potential source of customer churn into a formidable tool for retention.

Looking ahead, retailers face a myriad of challenges, including rising overhead costs, weak customer demand, and intense competition. In this dynamic landscape, prioritising seamless, omnichannel experiences is imperative for fostering lasting customer relationships and maintaining relevance in an increasingly competitive market.

Richard Lim, CEO of Retail Economics, underscored the importance of understanding and adapting to these shifts, stating, “The retail landscape has demonstrably shifted towards a unified, omnichannel strategy in 2024. The $15 billion figure spent online that is heavily influenced by physical touchpoints underscores the dynamic and multi-faceted nature of the modern customer journey. Convenience and value are paramount across all channels, from product discovery to delivery and returns, leaving no room for friction in the experience.”

“Retailers must understand this evolution and prioritise seamless, consistent customer experiences – regardless of whether customers choose online, in-store, or a hybrid approach. Single-channel strategies struggle to maintain relevance in this fluid environment. Embracing a unified, omnichannel approach unlocks the potential for lasting customer loyalty and reinforces brand relevance in the competitive landscape.”

The Ecommerce Delivery Benchmark Report 2024 provides valuable insights and recommendations for retailers seeking to navigate the complex terrain of modern ecommerce and drive growth in an ever-evolving landscape. Download your copy here.

About the Author: Shipstation

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