Early days for social commerce but demand set to rise
THE proportion of Australian businesses selling via social media is at just half the global average, as local companies grapple with fast-changing consumer habits and the cost of moving away from traditional retail models.
About 35 per cent of businesses globally sell via social networks such as Facebook and Instagram, but in Australia that falls to just 18 per cent, according to data from payments giant PayPal.
PayPal Australia managing director Libby Roy said while a fifth of Australian businesses were hesitating over the safety and security of customer information, a quarter still believed their customers don’t want to shop via social.
That’s despite 73 per cent of Australians saying they use their mobile devices to buy online, compared to a global average 71 per cent.
“It’s still early days for social commerce in Australia but with consumer shopping on social platforms showing strong increases, especially with younger audiences, it’s a consumer trend that can’t be ignored,” Ms Roy said.
While Australian business uptake is lagging, consumer adoption is more in line with global trends, with 27 per cent of people in Australia having made a social media purchase in the past six months – just shy of the 30 per cent average worldwide.
PayPal says more than 20 per cent of Australians shopping on social media do so at least once a week, with an average monthly spend of $121.
“If you consider that social commerce practically didn’t exist five years ago, the rise in this channel is meteoric, and it’s only going to continue to grow,” Ms Roy said.
“Like all channels, businesses need to consider their customer profiles – but with younger generations constantly on social, and purchasing via this channel, social is set to be the most important trend in e-commerce over the next five years.”
UBS retail analyst Ben Gilbert said Australian businesses were willing to shift to new, more cost-effective sales channels but that face hurdles from legacy issues such as long-running leases on physical stores.
Myer, The Reject Shop and Just Jeans owner Premier Investments are among the highprofile retailers to have either shut stores or renegotiated with landlords over rents.
“I believe local retailers are looking to evolve, and we are seeing more use of data to shift away from traditional push to pull models,” Mr Gilbert said. “The challenge is it takes time and costs money to do this.”