The pandemic has driven more Kiwis to online shopping and pushed up numbers 9 per cent in the last year, according to a new Westpac report out today.
The report also revealed that New Zealand is closer to the third world countries just ahead of Malaysia and Portugal in the e-commerce market.
"That makes New Zealand the 39th largest market for e-commerce in the world, placing it ahead of Malaysia, but just behind Portugal," the report said.
"There were 2.1m online shoppers in 2020, 9 per cent higher than in 2019, mainly because of the impact of Covid-19," said Westpac NZ industry economist Paul Clark.
Retailers need to concentrate on four areas to succeed: understand their customers, expand their presence, deliver more and be more responsive.
"First, they need to understand their customers. That's an old hat for many retailers, but with the proliferation of data sources and increasing sophistication of analytical tools, understanding customers has never been more important for retailers seeking a point of differentiation," Clark said.
"Secondly, in a world where device and channel use is expanding, retailers need to be everywhere their customers are. For most that's likely to mean a shift in channel maturity, from single to multi to integrated or omnichannel retailing.
"Thirdly, retailers also need to be able to sell the experience of shopping. Providing a seamless customer experience through omnichannel retail is part of that. So too is the repurposing of bricks-and-mortar stores away from product distribution to "showrooming", where consumers can test products in-store before purchasing online.
"Finally, retailers need to improve their responsiveness to customer demands," Clark said.
That means a sharper focus on maximising operating efficiencies. It also means moving away from linear supply chains to more flexible supply networks, and a shift away from "off the shelf" to "on-demand" product availability. To that extent, some retailers are likely to move downstream, promoting brands, taking orders, and leveraging off supply partners to deliver "on-demand" to customers.
The report by the banks' economics team showed how the traditional retail model was changing with digital technologies disrupting retail supply chains, transforming operational processes, and revolutionising how products are marketed and sold.
In 2020, more than 10,000 firms that provided online shopping in New Zealand generated about $4.1b and a further $1.7b coming from offshore retailers from online sales.
"That equates to an average spend of $2500 in 2020, almost 16 per cent higher than in 2019," the report showed.
But compared to China, where online shopping is worth almost US$2t/year, accounting for just over 50 per cent of fall retail activity globally. The US - the world's second-largest online market - generated sales of just over $500b in 2020, the report showed.
In February, NZ Post research showed that Kiwis spent over $1b more in online in 2020 than in 2019.
NZ Post's eCommerce Spotlight research into how Covid has affected our online shopping shows that we spent $5.8b online last year, about $1.2b more than in 2019.
"This is an incredible result," said NZ Post general manager of business marketing, Chris Wong. "Our research throughout 2020 showed that online shopping was continuing to increase, and now that the year has finished we've conducted research that shows Kiwis spent more online last year than ever before, with 2020 online sales up 25% on the year before. The good news for Kiwi businesses is that 71 per cent of all online spend was with domestic retailers.".
Mastercard New Zealand undertook similar research earlier this year.
Senior vice president of Mastercard Australasia Peter Chisnall said this research reveals consumer demand and heightened expectations around the online shopping experience remain strong.
Yet 57 per cent of consumers said they've abandoned their shopping carts due to a complicated check-out process, and 62 per cent are concerned about the security of their banking and personal details, Chisnall said.
He said with ongoing uncertainty flowing from Covid-19 – providing customers with a superior online shopping experience has become essential.
The report also revealed that SMEs need to address the innovation consumers expect to see in-store, with 55 per cent of respondents believing retailers need to do more to embrace new payment technologies to provide more payment options and greater convenience.
Other findings of the report identify the key areas where SMEs can improve the online customer shopping experience, were to offer a secure way to save information, ensure e-commerce site is desktop and mobile device friendly and ensure an efficient and easy return process.
Alongside this, enthusiasm for a broader range of payment technologies has accelerated. Kiwis view mobile payments 66 per cent as the next technology payment to take off, followed by wearable technology 45 per cent, biometrics 30 per cent, and digital currencies 23 per cent, the report said.