Home » IAB: Cost-Of-Living Pressures Dent Online Shoppers Desire To Buy Sustainably

5 September, 2023

IAB: Cost-Of-Living Pressures Dent Online Shoppers Desire To Buy Sustainably

Australian online shoppers still value buying from brands and retailers who talk up their sustainability credentials but, as the cost of living bites, they prefer getting a good bargain, according to new research from IAB Australia.

Lead image: IAB Australia CEO, Gai Le Roy.

After significant growth in peak pandemic years, Australian consumer online retail spending has stabilised according to the Australian Ecommerce Report 2023, released by the industry body today.

The report found that two-thirds of consumers think convenience remains the number one reason for purchasing online, however with recent rises in the costs of living, the report also found consumers are increasingly focusing on discounts, loyalty programs and seeking price comparisons to minimise unexpected price increases.

Purchasing ethical and sustainable brands is still important to online shoppers this year — but not as much as last year.

Purchasing from ethical brands was important to 45 per cent of consumers (46 per cent in 2022). Meanwhile, 47 per cent prefer to purchase from sustainable brands (the same as in 2022) and 58 per cent prefer to buy from Australian-owned brands (64 per cent in 2022).

These declines could reflect the rising cost of living and almost a fifth of consumers have dropped their online spending since last year.

“Australian consumers are increasingly enjoying a mix of online and in-store shopping, but it’s clear retailers face a new set of challenges with shoppers who are price sensitive seeking value for money in their brand choice. We know that constant discounting and undercutting competitors is not a long-term strategy, but retailers will need to consider how to offer a clearly articulated value exchange for consumers,” said Gai Le Roy, CEO of IAB Australia.

Loyalty programs are becoming increasingly important with 62 per cent of online shoppers increasing their usage as they look to enhance their shopping experience while saving money.

Nine in 10 online shoppers remain signed up to at least one shopper rewards program with 44 per cent of those signed up having four or more cards.

Half of online shoppers pay a fee to subscribe to a retail loyalty program such as Amazon Prime, eBay Plus, Wesfarmers OnePass, Woolworths Delivery Unlimited or Costco Membership.

The report found that while these loyalty programs are providing retailers with rich behavioural data, trust, transparency, and a clearly articulated value exchange with benefits delivered to consumers are key to underpinning successful retail marketing.

Concern with how retailers use shopper data increased over the last year with 60 per cent reporting some level of concern about how data collected via loyalty cards (up from 51 per cent in 2022) and 60 per cent concerned about data collected via transactions (up from 55 per cent in 2022).

When it comes to reaching consumers, it is clear that some channels are growing in popularity. Search remains key with 64 per cent of shoppers discovering brands when shopping online, but it should be combined with other channels to maximise brand and sales outcomes.

Half of online shoppers are aware of shoppable advertising, and 16 per cent have purchased this way — and a quarter of 18-29-year-olds.

Retailers’ own stores and communications are also key to shoppers discovering products and brands with three-fifths of online shoppers often reading content produced by retailers.

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