NZ Post has just released the definitive summary of the state of NZ e-commerce. The report is packed with insights on e-commerce and includes international benchmarks, regional analysis, customer demographics and retail category analysis.
I’m confident that this is the definitive report due to the fact that it is built from actual customer spend rather than survey or claimed behaviour. NZ Post worked with Datamine to use anonymised credit card data from the past two years that is then mapped to Census data to provide a total population view.
Here are my top insights from the report:
- E-commerce is now 8.1% of total retail spend in NZ, this is just above Aussie, but below the US (9.0%) and the UK (19.1%).
- E-commerce is likely to double to 17.5% of total retail spend in the next three years.
- As you would expect e-commerce is growing faster than bricks and mortar, with annual growth rates of 13% vs. 1%.
- Only 40% of the population spent online in the last year, therefore growth is likely to come from both increased customer numbers and increased frequency of purchase.
- We are already seeing an increased frequency in online transactions, with customers shopping more often at a lower transaction spend.
- I’ve mentioned this in previous posts and it’s good to have it confirmed and enhanced. Of all NZ online spend,45% of that goes to an overseas company, however that can now be split into 12% on online services such as netflix and itunes, and 33% on products.
- The worrying thing for NZ retailers is that international spend increased 23% year on year whereas domestic e-commerce spend only increased 9%, or put another way, international e-commerce is growing 2.5x faster than domestic.
- Fashion and books & entertainment appear to be the most exposed to international competition with ~50% of spend already heading that way.
- More worryingly for domestic e-commerce, customers under 30 are more likely to purchase from an international store, as they move up the income scales this could see even more dollars flowing offshore.
- It wouldn’t be an e-commerce report without a comment on Amazon. Amazon claims 44% of US online spend.
- Mobile continues to grow in importance with 40% of New Zealanders regularly purchasing products and services on their mobile.
So what are the key take outs for NZ retailers:
- At 8.1% of total retail spend, e-commerce has to be a core part of your strategy.
- Don’t forget mobile, over 50% of all web traffic now originates from mobile.
- This is going to double over the next three years – what does your forecast look like?
- There might be a correction through applying GST to international goods, although the worrying trend is international growth is 2.5x faster than domestic. How do we reverse this trend?
- One way to look at this is to understand the drivers of purchase and decide where you can win. Customers are likely to make their purchase decisions based on selection, price, speed of delivery and customer experience. Is a winning formula for domestic e-commerce retailers to match on customer experience (this is table stakes), match on price, win on speed of delivery and recognise the international retailers will always win on selection? How do you play across all four of those factors?
I can’t fully do the report justice in this short article so grab your copy or the Full Download here