‘Buy now, pay later’ schemes are on the rise especially amongst millennials.
Australia’s e-commerce market is expected to reach approximately $37.89b (A$52.5b) this year, growing at a compound annual growth rate (CAGR) or 12.3% between 2016 and 2020, according to data and analytics company GlobalData.
The recent COVID-19 oubreak—particularly the social distancing measures in place—further accelerated its trend, noted Ravi Sharma, banking and payments lead analyst at GlobalData.
“Social distancing, self-isolation, closure of brick and motor stores due to lockdown measures have led to higher preference for online channel by consumers for making purchases during the pandemic. The current crisis opened e-commerce market to a whole new set of consumers who were earlier not using online channel,” Sharma said.
One of the key barriers for e-commerce adoption in Australia was consumers’ behavior to physically see products before purchasing, GlobalData’s study found. This is gradually changing as physical stores are being shut and consumers are being compelled to shop online.
In April 2020 alone 200,000 new shoppers entered online space in the country, as reported by the Australia Post.
Credit and debit cards are the most preferred method for e-commerce payments by consumers, accounting for 49.3% share, a separate study by GlobalData on banking and payments found.
Meanwhile, alternative payments like PayPal, Apple Pay and Google Pay are increasingly preferred as they offer added convenience by enabling faster payments during checkout.
The ‘buy now, pay later’ service is also becoming a popular payment option in the country. It is particularly being preferred amongst millennials, who are using this service as a budgeting tool to spread payments out over time.
The leading provider in this space, Afterpay, now has a customer base of 3.3 million or a 5.5% share in e-commerce market by value.
“The increased use of online shopping during the pandemic prompted high growth in online sales as retailers and consumers adapt to a new normal. E-commerce has become the default option for several customers in Australia and is set to remain the preferred method even beyond this pandemic,” Sharma concluded.
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