The future of e-commerce


enter,keyboard,shopping,online,ecommcerThe local online shopping industry is showing no signs of slowing, with industry revenue expected to grow by an annualised 24.1 per cent over the five years through 2013-14 to $12.4 billion, according to an IbisWorld report.

While the industry is still in its infancy, both technologically and financially, it has grown dramatically over the past five years to become part of the mainstream retail industry. In 2013-14, the industry is forecast to increase by 11.3 per cent.

“The rise of the industry has been aided by the rapid growth in internet and broadband penetration, combined with an acceptance of electronic commerce as a viable and safe alternative to traditional bricks and mortar retailing,” Lauren Magner, industry analyst, IbisWorld.

Industry profitability has remained at a stable level, despite a strong increase in total revenue. The start-up and maintenance costs for major online websites has kept profit margins low, as have the high levels of competition within the industry, however, for small operators, the cost of setting up a website can be minimal.

As a result, there has been a significant influx of new entrants into the industry over the past five years, with enterprise numbers growing at an annualised 16.3 per cent.

As online retail becomes increasingly normalised, revenue growth is expected to temper over the next five years.Regional areas will be able to access faster and more-secure internet connections through the rollout of the National Broadband Network.This will substantially increase the industry’s potential consumer base.

“The growth of online retailing through smartphones and tablets will provide further opportunities for operators to enhance products and services and reach a wider, technologically savvy audience,” says Magner.

An increasing number of bricks and mortar retailers will migrate online to complement traditional offerings. Industry revenue will also be boosted as older Australians become increasingly computer literate. Furthermore, the ongoing recovery of the global economy will bode well for the retail sector in general.


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