E-Commerce

A Matter of Clicking Your Fingers
Sydney Morning Herald (Extract) - April 30, 2005

Australian consumers have found new confidence in online shopping, splurging $617 million in March alone. David Binning reports on why remote retail therapy is now catching on. For years e-commerce has been tipped to transform traditional notions of buying and selling. Actual "stores" with walls, doors and floors, investors were assured, would eventually be overtaken as people learnt they could buy almost anything from anywhere, more cheaply and without even leaving the house.

But speak to anyone in the internet area and they'll tell you that the April 2000 crash reverberates today as strongly as ever, and that such claims are still dealt a generous dose of salt before anyone listens seriously, let alone parts with a dollar. Recently, though, the sceptics have been given more than a little proof in the pudding.

While Australians are considered to be early adopters of new technology, shopping over the internet was for some time an exception because of our sluggish uptake of broadband, regarded as vital to increase ecommerce. In little more than a year, however, this has changed dramatically. The Australian Bureau of Statistics reported a 51 per cent increase in the number of non-dial-up subscribers (mainly households) to 1.3 million for the 12 months to September last year, just less than a quarter of the approximately 5.7 million people now online. Significantly for e-commerce, the report also noted that households now account for 75 per cent of non-dial-up, usually assumed as broadband, connections.

The higher speeds of broadband allow consumers to move through sites, download images, video and new pages much faster than they would via a dial-up connection. The research group Nielsen//Net Ratings Australia recorded a 21 per cent rise in the number of people
entering online commerce sites in Australia last year. Supporting this growth, 53 per cent of internet users in Australia older than 16 had bought something online, justifying a 20 per cent rise in spending on online advertising for the period. The US and British markets grew by 17 and 13 per cent respectively last year.

In 2003, Americans spent $US55 billion ($71 billion) online, a 26 per cent jump on the previous year, official US retail trade figures show. A US study released last year by Goldman Sachs, Harris Interactive and Nielsen//Net Ratings, reported online consumers spent about $US1.5 billion on clothing-apparel, just more than $US1 billion on toys and games and $US1.1 billion on books and music.z

The improvement of online shopping sites, increased use of electronic banking and payment systems along with higher internet speeds are considered the main reasons for the growth of on-line shopping, while better product selection, cheaper prices and no crowds are also big drawcards.

The online auction house eBay has spawned a global phenomenon that is as surprising for how many participate as for some of the bizarre things that change hands. Late last year a Sydney man sold a piece of cereal shaped like Stephen Spielberg's ET on eBay for $1035. Then there was the $US28,000 paid for a cheese sandwich, made and half-eaten in Florida 10 years ago, purportedly bearing the image of the Virgin Mary. The auction generated 1.7 million hits before the sacrosanct snack was grabbed by the online casino Goldenpalace.com.
In the US close to half a million people make a full-time living buying and selling on eBay, while in Australia several thousand users have joined the party. The company has more than 2 million registered users here, and more than 125 million members globally.

Locally, eBay recorded a 110 per cent jump to $600 million in the total value of goods traded throughout 2004, making the Australia-New Zealand operations the company's fifth largest. Trade in cars and motorbikes rose 160 per cent in the same period, with a car now sold every hour on the site in Australia.

"Australians were late in catching on to e-commerce but we have certainly seen that turn around in the last 16 months," eBay Australia-New Zealand's managing director, Simon Smith, says. Travel.com also recorded a marked improvement last year following a management reshuffle in late 2003. The company's managing director, Bill Gair, says there has been a substantial shift in the way travel is contracted, marketed and sold. Travel.com recorded 2.1 million online customers for air fares and accommodation last year and expects business to expand further as big airlines align themselves with online systems and ideas.