Subscription services emerge as dominant force

eBay leads the pack.

The majority of Australians are shopping on their mobiles, with subscription services emerging as a new retail frontier and marketplaces maintaining a dominant role in online shopping.

The 2018 PayPal mCommerce Index that surveyed payment patterns and expectations of Australian smartphone users, gives new insights into the growing mobile commerce landscape in Australia.

Online marketplaces are still going strong with the index revealing nearly nine-in-ten smartphone users are shopping on online marketplaces like eBay, with half saying they do so at least once a month.  These marketplaces have become the top destination for Australian shoppers to browse for products when they have a purchase in mind, trumping search engines (43%) and online retail stores (29%).

Australian businesses are also aware of the power of online marketplaces, with two-in-five selling on marketplaces. eBay remains the most popular marketplace for Australian consumers (79%) followed by Amazon (40%), Etsy (17%) and Alibaba (9%).

The index found that while three quarters are shopping on their mobiles, a significant gap remains between high consumer adoption of mCommerce and business readiness to accept mobile payments. Currently just over half of Australian businesses are optimised to accept mobile payments but despite this lack of business readiness, the average percentage of sales taken via mobile has jumped 32% year-on-year, indicating the strong growth of mobile as a channel for Australian retail. The index also showed that half the population are already using at least one subscription service and spending an average of $32 per month on subscriptions.

PayPal Australia managing director, Libby Roy said while subscription services are most popular with younger shoppers, adoption is strong across all demographics and the popularity of these “set and forget” services is paying off for businesses.

The vast majority of Australian businesses said that revenue increased after they implemented a subscription model and one in three businesses reported a revenue increase of more than 30%. Regardless of whether they offer a subscription service or not, a third of businesses acknowledged that subscriptions make it easier to retain customers and drive a recurring revenue stream.

“Despite strong uptake of subscription services, our research found that only one-in-ten Australian businesses currently offers subscriptions, revealing an opportunity for businesses looking to improve customer loyalty and maintain a recurring revenue stream,”  Roy said.

Movies, music and software are the top three most popular categories for online subscriptions. “For businesses considering adopting a subscription model, our research found that having no lock-in contracts and easy opt-out solutions; being able to pay securely; receiving discounts or subscriber benefits; and having a mobile-optimised service are all critical factors when it comes to driving consumer sign-up,” she said.

Mobile optimisation was also found to be essential  to business success with the index showing that almost half of Australians who buy via a mobile do so at least once a week, with one-in-eight now mobile shopping on a daily basis. More than a quarter of consumers surveyed prefer smartphones over any other device for making online purchases, a jump of 50% compared to the inaugural results in 2016.

In line with consumer adoption, nearly one-in-five Australian businesses now attribute more than half of their sales to mCommerce, more than double last year’s figure.  Meanwhile, businesses reported a 32% year-on-year increase in the average percentage of sales taken by mobile.

As consumer dependency on technology accelerates, so too do expectations of mobile experiences. “Our research found that nearly half of Australians are annoyed when a site doesn’t work well on a mobile and almost a third of mobile shoppers have abandoned a purchase due to lack of mobile-optimisation or because of security concerns,”  Roy said.

Social commerce or shopping via social media platforms like Facebook and Instagram, has continued to grow in popularity, with one-in-five respondents purchasing via social media in the last six months, a jump of 73% year-on-year. Australians are also using social media to ‘window shop’ for inspiration and find specific brands or products, with one-in-five saying they’ve purchased items through an online store after seeing them on social media, a figure that jumps to 31% for consumers under 35 years. However, business adoption of social commerce remains relatively steady at 13%, indicating there is an opportunity for businesses to further investigate this growing channel.

The index found that Facebook remains the most popular social commerce platform for Australian social media shoppers (81%), followed by Instagram (18%), Snapchat (9%) and Pinterest (6%).


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