Key Outtakes from NZ Posts 2022 e-commerce report and how this could impact your biz in 2023
The latest NZ Post annual 2022 e-commerce report is out and it makes for some interesting reading.
If you are an online retailer, it is well worth digesting the full report here but I’ll attempt to summarise the key nuggets of gold in this report below.
So let’s crack into it!
Thanks to the pandemic (and the seemingly never-ending lockdowns) Online shopping saw a staggering 70% increase in spending in 2021 compared to pre-pandemic levels. And whilst this continued into the first half of 2022, as the lockdown restrictions eased and the resulting ‘inflation pandemic’ started to bite, we saw a correction the this hyper growth in Kiwis online spending habits, overall resulting in online spending in 2022 decreasing by 4%.
In 2022 Online spending reached $6.07 billion for the the year. That compares with $51 billion spent in-store, representing 11% of total retail spending.
The chart below shows the exponential shift in online spending across 2020 and 2021 and the subsequent correction in the second half of 2022. If you are an online retailer, hopefully this gives you some context around assessing your 2022 sales results.
In 2022, the average shopper made 27 transactions with an average spend over the year of $3,083. The average basket was up 1% on 2021 to $112.65 with the report suggesting that consumers became more price conscious substituting for more lower cost alternatives and / or buying fewer items.
There was also some interesting insights by sector. From the report:
“While total spending overall (online and instore) increased across all sectors in 2022 compared to 2021, Health & Beauty was the only online sector to experience positive growth in spending. A 10% increase in online spending was driven by strong growth in essentials like ‘drug stores & pharmacies’ (up 22%) and ‘misc. medical’ (up 24%). Sector spending on discretionary, non-essentials, like cosmetics (-7%) declined”
The other big decline was in Homewares, Appliances and Electronics likely due to this spend being diverted into hospitality and travel as restrictions eased.
30-59 year olds make up more than two thirds of online shoppers. I found this interesting as I would have expected this to be more evenly split with the 15-29 year old groups however the report indicates this could be due to the impact on their discretionary spend across the year.
Another key insight I took from this report was in the dramatic rise of ‘Buy Now, Pay Later’ uptake in 2022, up a significant 29% vs 2021 and at levels three times higher than 2019!
Here are some of our thoughts on how to do just that!
Its costs on average 5x as much to secure a new customer as it does an existing one so show them some love for having supported you in the form of a ‘surprise and delight’ offer. It could be something that’s exclusively only available for them to help them feel special, a sneak preview or earlybird offer on a new product. An easy way to do this is via segmenting your customer list to reward your highest value customers. Look back over their shopping behaviour and your product lifespan and perhaps nudge them that it’s time to restock or suggest complimentary products to go with something they have already bought from you.
Ensure your website is well optimised for the customer experience
Make it REALLY easy for your customers to find what they need and the shopping cart process as simple as possible to complete. Behind the scenes, make sure your website is being well indexed by Google, you have your abandoned cart email strategy on point and the delivery process is as seamless and well communicated as possible.
If you don’t already offer it, explore your Buy Now, Pay Later options
This was quite a staggering insight for me from the report and shows there is a growing demand for it. so whilst yes it does come with additional fees this may well be worth it to secure the sale from your customer.
Show your face!
73% of online sales last year were supporting Kiwi businesses. People love to buy from people and believe it or not, want to get to know the people behind the products and the why of your business. In fact, the ‘About Us’ page is generally one of the top 3 pages visited on a website so whilst you’re at it give it some love! Nurture that relationship and grow the ‘Know, Like and Trust factor by using your voice to connect with prospective customers.
Focus on offering more Value as opposed to Discounting to protect your margins
2022 saw fewer average online transactions and this is likely to be the case this year, so focus on driving up that average basket order rather by offering value ads rather than straight discounting. Look at bundles of complimentary offers or a buy one, get one free, free shipping etc etc. Test what you think will resonate with your customers.
I will be watching for the latest update on Q1 2023 as these results will confirm if we have already entered a recessionary period. There was some really interesting nuggets I found in here that will be sparking some conversations with our clients about how we might reframe our approach to market their businesses in the coming months.
Id love to hear your key outtakes so hit that reply button and share!
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