Digital commerce, or online shopping, is here to stay. That is the message from leading international market research company, Nielsen at this year’s Hort Connections.
The company’s Retail Industry Group Executive Director Megan Treston explained online growth is sitting at 10 per cent, compared to physical retail grocery shopping which is at 2.5 per cent, but it still has just a two per cent share of the market. She has compared shopping over the internet to an advanced version of the milkman delivering dairy products to your door - but to a much greater extent, covering nearly every product, including groceries.
"We say one in five people are purchasing online from a food perspective that is packaged and fresh groceries," Megan Treston said. "The interesting thing is that they tend to buy bigger grocery baskets. So we run at about $100 a basket when buying online compared to $40-$50 odd when you are in the bricks and mortar environment. There's a couple of reasons for that; convenience is a big one."
Ms Treston says Australia is behind the United Kingdom, which has 50 per cent of households buying items online, and a six per cent share in the market. While she says families are the most common online shoppers, she says the millennials are most engaged in the online space and drive growth in coming years.
"Today they don't have the big families that are going to generate the big spends," Ms Treston said. "But obviously that will come. So capturing them as they come through will make sure you have success in this space. We have predicted that there is $2 billion up for grabs in the next five years. If you think about all the shoppers that bought something today online, and they were only going to convert some of them from light to heavy, we would increase that spend by more than 14 times."
Nielsen says it is important for businesses to not only think about the point of purchase, but the whole end to end journey, including education and researching products and tips on how to use them, as well as brand positioning.
But she concedes that people feel safer buying more durable items online, even in terms of fresh produce. In a research project conducted by Nielsen, Ms Treston said 44 per cent of respondents want to inspect browse and check products when they are buying. But around a third would consider using digital it if there was a guarantee that they would be reimbursed for low quality items of produce.
Overall she says customers are more likely to buy items such as zucchinis, peas, capsicum and lettuces, but would rather physically see and feel softer items such as stone fruit and berries.
"So something to take into account is what categories you are playing in and is there a trust factor that we can strengthen," Ms Treston said. "The reality is produce is a sensory experience. It's a barrier globally. Having said that, we are seeing the growth starting to come through; whether that be a value growth, the spend each week, or the number of times they are coming into buy online. We do see fresh produce outstripping packaged."
Ms Treston is also encouraging businesses entering the online world to invest, and insure they are creating a strong dialogue with the customer. She points out that millions of dollars are being spent in shopping centres but it is not happening in the digital experience. She says around 60 per cent of people will not buy online if there's not a quality photograph of the product.
Hort Connection was a three day, joint industry conference and Trade Show, catering to growers and whole-of-supply-chain companies and organisations. It will return in 2018, from 18-20 June in Brisbane.