Shop the World! Consumer attitudes towards global distance selling

Transcription

1 Shop the World! Consumer attitudes towards global distance selling

2 Table of Contents Shop the World 1 Table of Contents Editorial... 2 Shop the World! - in five minutes... 3 Shop the World! - in half an hour... 4 Media use... 4 Distance selling - Market overview... 5 Distance selling - Use... 6 Search for product information... 8 Supplier selection... 9 Placing orders...10 Payment methods...11 Delivery...12 Returns...13 Cross-boarder shopping...14 Australia Austria Brazil Canada China France Germany Great Britain India Italy Japan Mexico Netherlands Poland Russia South Korea Spain Switzerland Turkey USA Appendix Methodology: Study design and sample size Questionnaire Legal notice

3 Editorial Shop the World 2 Dear Reader, G lobal distance selling accounted for sales of 616 billion in 2013 and is expected to see annual growth of 10.7% in the next five years. This trend now influences almost all sectors of the economy. An increasing focus is being placed on the ecommerce customers who decide whether, when and under what conditions they order goods online. Businesses thus have to understand the various steps in the customer s journey through the online purchasing process. And they must also be aware of the economic and cultural differences that drive cross-border ecommerce. In this Shop the World! consumer study, more than 11,000 people in 20 countries were asked about their attitudes, behavior and preferences in respect of different media, product selection criteria, payment methods, and delivery and return options. They were also asked about their reasons for ordering goods from abroad, and the obstacles they face in doing so. The same data was collected for each country to allow the first ever comparative study of distance selling practices in 20 different countries around the world. The survey is supplemented by a set of country profiles containing current distance selling sales figures and forecasts, as well as demographic, economic and mediarelated data. I trust you will find the study valuable in your work, and wish you an interesting and informative read. Yours Thomas Kipp CEO DHL ecommerce

4 Shop the World! - in five minutes Shop the World 3 Shop the World! - in five minutes Media use Distance selling market overview Customer Journey Cross-border shopping When it comes to internet use, the Netherlands lead the field (93%). China (42%), Mexico (38%) and India (13%) bring up the rear. South Korea is the market leader in terms of smartphone share (73%). The global advertising industry is set to see revenue of 413 billion in After the US and China, the biggest growth in global advertising expenditure will be seen in emerging economies like Indonesia, Argentina and Brazil. While TV remains the dominant medium in the global media mix, future growth will primarily occur through spends on mobile advertising. According to Euromonitor International, global distance selling sales amounted to 616 billion in The three biggest distance selling markets are the US, China and Japan. The global distance selling market is expected to see annual growth of 10.7% between now and The largest growth is expected in China (24.5%), Mexico (16.5%) and Australia (16.4%). The top products offered via distance selling are fashion, consumer electronics, media products and food. There are, however, marked country-specific differences. Some 84% of the online population are distance selling customers. Emerging economies see lower user numbers, but enjoy considerably higher growth forecasts. Annual per capita orders average 13 in global comparison, with countryspecific order numbers ranging from 6 in Mexico to 29 in Great Britain. Customers mainly search for products online (93%), largely via search engines and suppliers websites. Their main reasons for choosing a supplier are affordable prices and free delivery. Orders are primarily placed online using a PC, followed by those placed with mobile devices. China, South Korea, and Australia have the highest shares in mcommerce (some 15% of orders overall). Credit cards are the most frequent payment method used. Preferences differ from region to region, however. These include for example the use of Alipay in China, and cash on delivery in India. The key ordering criteria are speedy, free delivery. Acceptable delivery times range from between 3.8 days in Turkey to 12.4 days in Russia. The highest return rates are seen in Germany, Austria, Switzerland and the Netherlands (between 9% and 13%). Some 45% of internet users have ordered goods from abroad. Figures in emerging economies are significantly lower than those for industrialised countries. The main exporting countries are the US, Great Britain, Germany and China. The main reasons for ordering goods from abroad are that they are not available domestically and are lower-priced. In emerging economies, better quality and protection against counterfeit goods and product piracy are key drivers in the purchasing decision. As the only one of the emerging economies covered by the study, China has extremely high user rates, order numbers and significant growth potential.

5 Shop the World! - in half an hour Media Use Distance selling-market overview Distance selling use Searching for product information Supplier selection Placing orders Payment methods Delivery Returns Cross-border shopping Shop the World 4 Shop the World! - in half an hour Media use Internet use As more and more people use the internet huge country-specific differences emerge. The Netherlands lead the field with 93%, followed by Great Britain (87%) and Canada (86.8%). India, China and Mexico bring up the rear. While Mexico and China have online populations of 38% and 42% respectively, only 12.6% of India's consumers use the internet. With growing use of smartphones, mobile access to online content is on the rise. Compared with 2012, state subsidisation and billion-strong investment in Brazil, Poland and Turkey have led to a two-fold rise in use of internet-compatible smartphones. In Russia and Mexico, smartphone use has risen from 20% to 37%. But South Korea, where 73% of the population own a smartphone, is the uncontested leader. Advertising The global advertising industry is set to see revenue of 413 billion in Growth of 5.8% and 6.1% is forecast for 2015 and 2016 respectively. While TV remains the dominant medium in the global media mix, future growth will largely be seen in expenditure on mobile advertisement. The three biggest advertising markets are the US ( billion), Japan ( 41.4 billion) and China ( 31.9 billion), although Japan is expected to relinquish its No. 2 spot to China in Apart from the US and China, the biggest growth in global advertising expenditure will be seen in the emerging economies such as Indonesia, Argentina and Brazil. Global advertising expenditure in Eur bn. * Top ten contributors to ad spend growth in Eur bn. * USA China Indonesia Argentina Brazil UK Japan South Korea Russia Global media mix 2013 in % * Contributors to global growth in adspend by medium in Eur bn. * Mobile internet TV TV Radio Movies Outdoor advertising Desktop internet Out of home Radio Movies General magazines 4.1 Internet desktop Mobile internet Newspapers Magazines India 1.9 Newspapers -2.7 * Source: Zenith Optimedia 2013

6 Shop the World! - in half an hour Media Use Distance selling-market overview Distance selling use Searching for product information Supplier selection Placing orders Payment methods Delivery Returns Cross-border shopping Shop the World 5 Distance Selling Market Overview Market data and trends Distance selling sales rose again in This boom is expected to continue: Euromonitor International forecasts annual growth of 10.7% (CAGR) for the period up to While growth in most established distance selling markets in Europe and the US is below the global average, in the emerging economies investment in infrastructure and an increasing middle class are generating growth which in most cases exceeds the global average by far. With estimated annual growth of 24.4% for the period up to 2018, China leads the field closely followed by Mexico with 16.5%. Surprisingly, Australia is also among the leaders, with an annual growth of 16.4%. In Europe above-average growth is expected in Italy, Poland and Spain. Around 46% of global distance selling revenue in 2013 was attributed to clothing, consumer electronics, media products and food. However, country-bycountry differences are evident: While clothing dominates in China and Germany (30.4% and 27.2%), clothing doesn t play a role in Brazil. Here the highest demand is for consumer electronics (38.5%). In Turkey, on the other hand, food sales dominate the market (24.5%) and in Canada the demand for media products (28.6%). Distance selling sales by country in 2013 in EUR bn. * GL US CN 78.4 JP 57.4 UK 45.3 DE 34.9 KR 26.1 FR 25.7 RU 14.4 BR 8.6 IT 6.4 ES Distance selling market growth by country CAGR CN MX AU BR ES IT TR PL RU IN FR CA CA 6.1 GL 10.7 Development of distance selling and share of total retail n Eur bn. * CAGR: 10.7% AU NL CH DE US NL Home shopping Online shopping Share of total retail in % e 2014e 2018e MX 4.1 PL 4.1 AT 3.2 TR 2.9 IN 2.4 * Source: Euromonitor International KR JP AT CH UK Industrialised countries (Europe) Industrialised countries (Americas & APAC) Emerging economies

7 Shop the World! - in half an hour Media Use Distance selling-market overview Distance selling use Searching for product information Supplier selection Placing orders Payment methods Delivery Returns Cross-border shopping Shop the World 6 Distance Selling Use In the 20 countries covered by the study, on average 84% of the online population are ordering goods via distance selling. Great Britain and Germany lead the field both have distance selling histories going back more than 100 years. The emerging economies bring up the rear, although the lowest user rates there still amount to 73%. Use of distance selling In country-to-country comparison, there are huge differences in market size: Great Britain is the biggest distance selling market in the world on a per-capita basis, with annual sales of 45.3 billion in 2013 and a number of orders per capita of 28.7 per year. At the opposite end of the scale and typical of the emerging economies, Mexico has significantly less experience in distance selling, accruing just 4.1 billion in sales in 2013 and a number of orders per capita amounting to 5.8 per year. UK DE CN AT KR PL US CH JP FR GL IT ES NL AU IN BR RU TR CA MX Planning higher number of orders in future (current users) * IN CN BR TR MX RU IT PL ES GL CA AU UK KR US NL FR DE AT CH JP * Source: DHL Global Mail 2013 n (total) = 11,265; n (countries) = 500-1,040 ** n (total) = 9,161; n (countries) = , selection by those planning a larger order volume, basis: Current distance selling users Industrialised countries (Europe) Industrialised countries (Americas & APAC) Emerging economies

8 Shop the World! in half an hour In Mexico, and also in Turkey, Brazil and India, distance selling sales lie below 10 billion. About one-fifth of respondents made their purchases offline in stores. Annual number of orders per capita are in the single digit range. Nonetheless, these countries harbour growth potential: Over half of current distance selling customers plan to use this shopping channel more in future, and around 80% of those who visit stores say they intend to use distance selling in the future. Less typical among the emerging economies is China, where distance selling sales amounted to 78.4 billion in Of these, 95% were generated through ecommerce. Despite the country s greater affinity to distance selling (92%) the average number of orders per capita amount to 23.1 per year almost 60% of respondents say they intend to order more. Shop the World Media Use Distance selling-market overview Distance selling use Searching for product information Supplier selection Placing orders Payment methods Delivery Returns Cross-border shopping Average number of orders per capita per year Mean * DE 18.2 UK 28.7 NL 7.9 CA 9.7 FR 12.0 ES 10.1 US 13.6 PL 12.7 RU 6.8 AT 15.6 CH 12.6 TR 8.1 CN 23.1 IT 10.1 JP 13.1 KR 16.5 MX 5.8 IN 8.5 BR 7.0 AU 14.3 GL 12.7 < 8 orders < 10 orders < 15 orders * Source: DHL Global Mail 2013 n (total) = 11,265; n (countries) = 500-1,040, Basis: all (including non-users with 0 orders) 15 orders or more 7

9 Shop the World! - in half an hour Media Use Distance selling-market overview Distance selling use Searching for product information Supplier selection Placing orders Payment methods Delivery Returns Cross-border shopping Shop the World 8 Searching for product information Across all countries covered by the study, some 93% of respondents go online to search for product information. Search engines are the No. 1 choice (53%), followed by retailers websites (46%), price comparison sites (44%) and online marketplaces (43%). Some 70% of distance selling customers also use offline sources, mostly in their immediate environment. 38% rely on experience gained by and tips from friends, acquaintances and colleagues, while about a quarter use catalogs and product visibility in retail stores. Country-specific differences are evident in the way users search for information. People in Brazil tend to rely on personal recommendations (48%), social media platforms (26%) and customer reviews (53%). In Japan, the trend goes more towards personal dialog (18%), while social media plays only a subordinate role. Search for product information Online (net) Search engines Retailer or manufacturer website Price comparison sites Online marketplace Customer ratings on the supplier s website Customer ratings in blogs and forums Social media platforms, such as Facebook, Twitter Apps (on smartphone, ipad or tablet) Offline (net) Recommendations from friends, acquaintances, and colleagues Catalog Product check in a retail store Product test ratings / expert test reports Mail advertising 15 Flags show national variations from the global average of at least +10% points. * Source: DHL Global Mail 2013 n = 9,386; Basis: Distance selling users

10 Shop the World! - in half an hour Media Use Distance selling-market overview Distance selling use Searching for product information Supplier selection Placing orders Payment methods Delivery Returns Cross-border shopping Shop the World 9 Supplier selection Price is the key criterion in choosing a supplier. This is especially the case in Japan (64%) and South Korea (66%). By way of contrast, people in India place significantly less importance on affordable prices (35%). The second most important criterion is free delivery. This is a key purchasing factor for 45% of people worldwide, and is the most important supplier selection driver in Japan and the US. Criteria for choosing a vendor Favorable prices, promotions, & special offers Free delivery Positive customer ratings on the internet Fast delivery Of less importance when choosing a supplier are the criteria involved in the subsequent phases of the purchasing process. In global comparison, one in four people expect speedy delivery (26%). This includes delivery time, which is of great importance to customers in Brazil (38%). Supplier preference can also be driven by customers payment option preferences (23%) and free returns (21%), the latter being of particular importance to shoppers in Germany (35%) and Austria (35%), where distance selling and especially free returns have long been the norm. Choice of preferred payment methods Free returns Large selection of products Good customer service Attractive product line Recommendations and experiences of friends, acquaintances, and colleagues Straightforward return process Official test seals, reviews, and test reports of independent institutions * Source: DHL Global Mail 2013 n = 10,617, Basis: Current and future distance selling users Flags show national variations from the global average of at least +10% points.

11 Shop the World! - in half an hour Media Use Distance selling-market overview Distance selling use Searching for product information Supplier selection Placing orders Payment methods Delivery Returns Cross-border shopping Shop the World 10 Placing orders Some 84% of the online population across the 20 countries covered by the study are distance selling customers who place on average 15.2 orders per year. A large number of these orders are placed online (75% using a PC and 11% via mobile devices). Use of mcommerce is disproportionately high in Australia, where 16% of orders are placed in this way, and also in China and South Korea (each at 15%). Although online orders tend to dominate, offline orders should not be neglected. Around one fifth of people who shop online also order goods in stores and have them delivered to their homes. Some 17% occasionally place orders by telephone, while 9% sometimes send a written order by post. However, the emphasis here is on occasionally and sometimes rather than regularly. Thus, the three offline channels only account for 10% of orders. Of these, 5% are orders placed in stores, 3% by telephone and 2% by post. This applies both to industrialised countries and most emerging economies. There are three big exceptions, however: In Turkey (57%), Mexico (55%) and India (52%) the share of online orders made using a PC is significantly below the global average of 75%. Instead of PCs, distance selling customers in these countries tend to order goods in stores (12%), by telephone (7%) and especially in India by post (9%). Share of distance selling order channels JP US UK CN GL AU KR TR MX IN * Source: DHL Global Mail selected countries By post, fax By telephone By Order in store & delivery to home Online mobile Online PC

12 Shop the World! - in half an hour Media Use Distance selling-market overview Distance selling use Searching for product information Supplier selection Placing orders Payment methods Delivery Returns Cross-border shopping Shop the World 11 Payment methods Credit cards are the most frequently used method of payment around the world. In global comparison, some 61% of respondents said they used this method (very) frequently or occasionally. In Turkey, Japan, the US, South Korea, Brazil and Canada this figure rises to over 80%. The Netherlands, Poland and Russia tend to view credit card payment with scepticism regular credit card use in these countries drops to just below 25%. Online payment systems like PayPal and Alipay are the second most-frequent payment method used. More than half of distance selling customers around the world say they use them (very) frequently or occasionally. As with credit card payments, use of online payment systems varies from country to country. In China, Aliplay a wallet solution which supports all national debit cards and international credit cards is the dominant choice. Almost all Chinese distance selling customers (91%) use it to pay for their orders. In Japan, by contrast, online payment systems are of little relevance: Nine out of ten customers (88%) say they never use them or only use them on occasion. Debit cards, prepayment, invoice payment, direct debit and cash on delivery see similar use rates of between 28% and 34%. But there are some countries in which these payment methods are the preferred choice. People in Great Britain (78%) prefer debit cards, while the Swiss (76%) and Germans (69%) like to receive an invoice before they pay. Cash on delivery, by contrast, enjoys wide acceptance in India (75%). Payment by installments is by far the least preferred method (12%), and is mostly used in South Korea (49%). Payment in distance selling Credit card Online payment systems Debit card Prepayment Invoice Direct debit Cash on delivery Installment purchase / financing Never Seldom Occasionally Frequently / very frequently * Source: DHL Global Mail 2013 n = 9,218-9,324, Basis: Current distance selling users Frequently / very frequently Flags show national variations from the global average of at least +10% points.

13 Shop the World! - in half an hour Media Use Distance selling-market overview Distance selling use Searching for product information Supplier selection Placing orders Payment methods Delivery Returns Cross-border shopping Shop the World 12 Delivery The maximum acceptable delivery time differs from country to country. Tolerance ranges from 3.8 days in Turkey to 12.4 days in Russia, whereby the country s size and the associated distances goods must travel are not necessarily the deciding factors. India is nine times the size of Germany, yet in both countries customers expect delivery within 5 days. Significantly more important, however, is population density: In Russia, the country with the longest waiting times, there are only 9 inhabitants per square kilometer, while in Turkey there are 100 and over 500 in South Korea. As a result, Turkish and South Korean customers expect to receive their deliveries within 3.8 and 3.9 days respectively. In all countries covered by the study, free and speedy deliveries are the key criteria when choosing a supplier. On a scale from 1 (not important) to 6 (very important), free delivery receives a 5.3 rating, while speedy delivery gets a 5.1. Third place goes to detailed information on delivery times and delivery date at the time of order (4.9). Preferences in respect of order tracking and supplier trustworthiness also differ from country to country: In emerging economies, some 30% of distance selling customers fear that products might not arrive. As a result, the importance of track and trace options, and supplier trustworthiness is higher than in industrialised countries. Requirements for delivery Mean ** Free delivery Fast delivery Detailed information regarding delivery period & delivery date when ordering Tracking information The vendor only works with reliable delivery companies Max. accepted order time The option of selecting the shipping company in days * Delivery to a retail store Other collection points (supermarket, kiosk, gas station) RU BR CA AU CH MX ES AT FR GL IT US JP CN UK IN DE NL PL KR TR Delivery to a parcel locker or drop box Not important at all Very important * Source: DHL Global Mail 2013 Mean, n (total) = 10,347; n (countries) = , Basis: Current and future distance selling users ** n = 10,270-10,462, Basis: Current and future distance selling users

14 Shop the World! in half an hour Shop the World Media Use Distance selling-market overview Distance selling use Searching for product information Supplier selection Placing orders Payment methods Delivery Returns Cross-border shopping Returns On average 13% of orders are returned in Germany and Austria. In almost all other countries, the return rate is below 10%; in Japan and Italy it is even as low as 2%. The global list of reasons for order returns is long, ranging from the top four does not fit (38%), defect (32%), poor quality (30%) and does not meet expectations (30%) to excessive delivery time (6%) and product cheaper elsewhere (4%). However, the reasons for a return differ from region to region. While fit and failure to meet expectations are the key reasons both in German-speaking countries and in Great Britain and Canada, poor quality dominates in emerging economies and South Korea. The different return rates and reasons can in part be attributed to cultural preferences, shopping basket composition and country-specific laws and legislation. Orders of clothing in multiple sizes and customer-friendly leg- islation, certainly in German- Return rate speaking countries, result in high Mean in % return rates, while the drivers in China are product piracy and poor quality standards. * DE 13% CA 4% UK 6% PL 3% NL 9% AT 13% FR 6% CH 9% RU 3% ES 5% US 7% IT 2% CN 5% TR 5% JP 2% KR 5% MX 3% IN 7% BR 3% AU 3% GL 6% < 3% Returns < 5% Returns < 7% Returns < 7% & more returns * Source: DHL Global Mail 2013 n (total) = 9,325; n (countries) = , Basis: Current distance selling users 13

15 Shop the World! - in half an hour Media Use Distance selling-market overview Distance selling use Searching for product information Supplier selection Placing orders Payment methods Delivery Returns Cross-border shopping Shop the World 14 Cross-border shopping Cross-border shopping Overview Top 3 countries for placing orders abroad Shopping without limits is a way of life for many distance selling customers. While some 45% have ordered goods from abroad, significant differences are evident between industrialised countries (53%) and emerging economies (31%). While in particular Europe has a well-established cross-border shopping tradition, it is the smaller or geographically isolated countries like Austria (79%), Australia (74%) and Switzerland (73%) that lead the field. Most of the goods ordered originate in the US. This applies to orders placed in emerging economies, industrialised countries in the Asia-Pacific region, and Canada. Exceptions include Russia, where distance selling customers mostly order from China as do those in the US. Customers in Europe tend to order from countries in the region. Cross-border shopping trends While 45% of distance selling customers have ordered goods from abroad, 75% plan to do so in future. The share of cross-border orders will rise significantly among customers in emerging economies: India, Poland and Mexico expect to see an increase from 30% to over 80%, while Brazil anticipates a rise from 41% to 84%. China promises a huge increase, from a low 20% to 78%. Some industrialised countries err on the side GL AT CH DE ES FR IT NL UK AU CA JP KR US BR CN IN MX PL RU TR (52) (91) (62) (47) (49) (48) (53) (42) (71) (77) (82) (69) (84) (48) (72) (66) (66) (87) (32) (66) (49) ASIA (OTHER) (31) (28) (42) (45) (45) (46) (53) (41) (37) (58) (41) (22) (19) (41) (55) (35) (24) (15) (32) (49) (40) (29) (23) (37) (33) (42) (39) (36) (31) (31) (45) (29) (18) (8) (31) (18) (30) (22) (9) (24) (26) (18) Example: In Austria, 91% of all respondents with experience of placing orders abroad had already ordered something in Germany. Hong Kong of caution when it comes to crossborder shopping: In Japan and the Netherlands, over 40% of respondents cannot see themselves placing an order with a supplier in another country. In South Korea and the US it is one third. Despite the many obstacles, customers seem satisfied with their crossborder orders. In global comparison, only 3% of respondents who have ordered from abroad said they would not do so again. This number is particularly high in the US and in Switzerland (6% respectively). Use of cross-border ecommerce * AT 79 AU 74 CH 73 UK 60 IT 57 ES 54 CA 54 DE 49 GL 45 NL 43 RU 43 FR 41 BR 41 US 40 MX 34 JP 32 KR 30 PL 30 IN 30 CN 20 TR 18 Future use of cross-border ecommerce ** AT 89 RU 89 IT 88 AU 87 ES 85 IN 85 BR 84 PL 83 CH 83 MX 82 CN 78 GL 77 UK 77 CA 76 DE 72 TR 70 FR 65 KR 63 US 62 NL 58 JP 54 * Source: DHL Global Mail 2013 n (total) = 4,738; n (countries) = , Basis: Current users of distance selling ** n (total) = 11,030; n (countries) = 480-1,029, Basis: All *** n (total) = 8,932; n (countries) = , Basis: All

16 Shop the World! - in half an hour Media Use Distance selling-market overview Distance selling use Searching for product information Supplier selection Placing orders Payment methods Delivery Returns Cross-border shopping Shop the World 15 Drivers in cross-border shopping The main reasons for shopping abroad are that products are not available domestically (73%) and that prices are lower elsewhere (63%). In emerging economies, better quality and protection against counterfeit goods and product piracy are key factors. These were cited particularly frequently by customers in China, India and Russia. Obstacles to cross-border shopping In global comparison, 20% of all internet users say they would not order from abroad in future. Among them are also experienced distance selling customers who think the obstacles and problems of ordering abroad are just too big. The biggest obstacles are seen in the delivery process: Long delivery times (56%), high delivery charges (54%) and complex return management (51%). These were cited to equal extent by respondents in all countries covered by the study. Cultural differences between the countries occur in the context of other barriers: Concern about counterfeit products is one of the main obstacles in Japan (56%), while in Switzerland only 31% share this concern. Language barriers tend to stop people in Turkey (49%), China (44%) and France (42%) from ordering goods from abroad. Drivers for ordering abroad Products not obtainable domestically Lower prices Greater selection Higher quality of the products Assurance against product counterfeiting Emerging economies Industrialized countries (Europe) Industrialized countries (Americas & APAC) * Source: DHL Global Mail 2013 n = 7,289, Basis: Current or future use of cross-border distance selling ** n = 10, Barriers to ordering abroad * Long delivery times High delivery costs Complicated return process Fear of fraud Customs clearance Non-transparent costs Uncertain delivery Uncertainty regarding warranty terms, payment process, legal situation, etc. Unknown product quality Uncertainty with problems Concern about misuse of payment data Language problems Concerns about data protection No demand because all products are obtainable locally Flags show national variations from the global average of at least +10% points.

17 Country Information Australia Beccy and Tom Australian distance selling clients are mobile, urban dwellers, price conscious, demanding and 8 out of 10 shop abroad.

18 Country information Australia Shop the World 17 Australian economy * The Australian economy appears stable. While noticeable real GDP growth was seen in 2013, the boom of the previous year has passed. Dependency on the Chinese market threatens the country s further growth. For years, Australia has profited from China s need for raw materials. Demand for coal, iron ore, uranium, and copper flushed capital into the country and strengthened the Australian Dollar. At the same time, the processing industry came under pressure because their exports were no longer attractive due to the high currency exchange rate. Since 2012, growth in China has slowed considerably and with it the demand for raw materials. Australia s strength as an export nation is threatened. COUNTRY PROFILE AUSTRALIA Metropolitan areas with 1 million inhabitants or more 2011 in thousands ** Perth 1,617 Adelaide 1,181 Melbourne 3,896 Brisbane 1,993 Sydney 4,479 Population 0-15 years 4.7 Population years Number of households Ø Household size Unemployment rate Inflation rate > Population, total 2013 in mn *** Age distribution 2013 in mn. Economic growth *** 2.6 Population 65 years and older in mn in % 2013 in % > * Source: Fischer World Almanac 2014, Germany Trade & Invest ** Source: Metropolitan areas with 1 million inhabitants and more; United Nations, Department of Economic and Social Affairs, Population Division (2012). World Urbanization Prospects: The 2011 Revision, CD-ROM Edition. *** Source: Copyright IHS, All rights reserved **** Source: Copyright IHS, All rights reserved

19 Country information Australia Shop the World 18 Internet use In Australia, the internet is part of everyday life. More than 80% of Australians are now online. The most widespread internet use is seen on the country s heavily populated east coast. But even in the outback, which is somewhat behind in terms of development, surfing the web is by no means uncommon. Internet the most powerful medium 2013 saw the internet take the highest share of Australia s media mix for the first time. High growth is expected primarily in internet and TV expenditure. Although spending in the big advertising sectors of retail, automotive and FMCG is stunted by low consumer confidence, a stable annual increase of 2-3% in total expenditure is anticipated by MEDIA USE IN AUSTRALIA Total advertising expenditure in EUR bn. * Internet users 2012 per 100 people ** Permanent access to broadband internet 2012 per 100 people *** Cellphones 2012 per 100 people **** Smartphone market penetration **** Representative domestic population 16+, n = 1, > * Source: Zenith Optimedia, 2013 ** Source: Copyright IHS, All rights reserved *** Source: The World Bank **** Source: Copyright IHS, All rights reserved **** Source: Our Mobile Planet: Google Global Smart phone Study 2013, > 52.2 Share of adspend by medium TV Radio Movies Outdoor advertising Internet Newspapers Magazines

20 Country information Australia Shop the World 19 Anything but laid back With a CAGR of +16.5%, the Australian distance selling business is growing significantly faster than its global counterpart (+10.7%). This also applies to food, media products, and consumer electronics, which are already being ordered with above-average frequency. DISTANCE SELLING IN AUSTRALIA Development of distance selling and share of total retail in EUR bn. * CAGR: 16.5% 0.2 Apparel and footwear Consumer electronics, computers + equipment Media products (books, CDs, DVDs, etc.) Housewares and home furnishings + textiles Food + beverages Household and consumer appliances Distance selling purchases in trend for 2018 in EUR mn. * , , , , ,995.6 Home shopping Beauty and personal care DIY and gardening OTC drugs and dietary supplements Online shopping e 2014e 2018e Share of total retail in % Traditional toys and games House cleaning (detergent, chastener, etc.) * Source: Euromonitor International

21 Country information Australia Shop the World 20 Distance selling on the up Distance selling is a given in Australia. With over 80% of the population already placing orders online, this figure is set to rise. Use of distance selling Yes No Australia 19.2 DISTANCE SELLING IN AUSTRALIA Number of orders in the previous year More than 20 orders 11 to 20 orders Future ordering behavior (current users) Australia Australia More frequently than in the last 12 months Non-users of distance selling - future plans Australia No 40.6 Yes to 10 orders to 5 orders Just as frequently as in the last 12 months Yes No orders Less frequently than in the last 12 months No 29.5 * Source: DHL Global Mail 2013 n Global from 1,275 to 11,265 n Australia from 71 to 522

22 Country information Australia Shop the World 21 DISTANCE SELLING *** IN AUSTRALIA On trend, but different Australia s distance selling business is similar to the global average, but there are some differences in the heavy users group. Highly active heavy internet users in Australia are broadly scattered across all age groups, with a slight majority among year olds. They are urban dwellers (68.3%) and tend to access the internet using mobile devices (60.2%). While the global average shows more women using distance selling, in Australia men have a slight edge. Another difference is seen in the number of older distance selling clients in the heavy users group (27.1%). This compares with the global average of 21.2%. Gender in % Age in % Occupation in % Education in % Community size in % Minors in the household Ø Household type in % Mobile Internet usage in % Yes No Media affinity: Online in % yes** Male Female <30 yrs yrs. 50 yrs. + Gross household income in % Low income Medium income High income Media affinity: Classic in % yes** Employed Unemployed Lower educational level Medium and higher level of education Rural (<50,000 inhabitants) Non-rural/urban (>50,000 inhabitants) Single 2-person household without children Household with children Household with 3 adults Heavy users* Global heavy users* Media affinity: in % yes** Australia* * * Source: DHL Global Mail 2013 n Global from 2,661 to 11,265 n Australia from 109 to 522 ** media affinity for online / classic / dialog marketing, if at least one medium from the respective area was rated 5 or 6 on a scale of 1 "absolutely not useful" to 6 "very useful" *** the top third of most active mail order users

23 Country information Australia Shop the World 22 Search engines in the lead Most Australian distance selling clients use search engines to find information. Many also use retailer websites or online marketplaces. They are also extremely price-conscious. Search engines CUSTOMER JOURNEY SEARCHING FOR PRODUCT INFORMATION Search for product information Australia in % * Large selection of products Recommendation and experiences of friends, acquaintances, and colleagues Criteria for choosing a vendor Australia in % * Customer ratings in blogs or forums Product test ratings / expert test reports Price comparison sites Official test seals, reviews, and test reports of independent institutions Positive customer ratings on the internet Product check in a retail store Attractive product line Retailer or manufacturer website Favorable prices, promotions, & special offers Online marketplace Straightforward return process Catalog Free returns Mail advertising Choice of preferred payment methods Social media platforms such as Facebook and Twitter Apps (on smartphone, ipad, or tablet) Fast delivery Recommendations from friends, acquaintances, and colleagues Free delivery Customer ratings on the supplier s website Good customer service * Source: DHL Global Mail 2013 n Global from 9,386 to 10,617 n Australia from 415 to 476, multiple mentioning

24 Country information Australia Shop the World 23 ACCEPTANCE OF ADVERTISING MEDIA Demanding target group Persuasive advertising is a particular challenge in Australia. Online shoppers tend to perceive advertising media as unhelpful. Internet search engines lead the way, with 62.7% of users perceiving them as very useful. Usefulness of advertising media, ** 1 and 2 Online advertising Ø Australia Social media Australia Product suggestions in online shops Australia Internet search engines Australia and 4 5 and Television advertising Australia Advertising letters Australia Australia Ø Household advertising Advertisements in magazines and periodicals Australia Advertisements in newspapers Australia Billboard advertisements Australia and 2 3 and 4 5 and Price comparison sites Australia Radio Australia Australia * Source: DHL Global Mail 2013 n Global from 10,218 to 10,384 n Australia from 462 to 468 ** scale from 1 "absolutely not useful to 6 "very useful Catalogs from vendors

25 Country information Australia Shop the World 24 Online ordering clearly preferred Ordering online: Almost three-quarters of Australian distance selling clients order online using their PC. Another 15.6% use mobile devices, and 4.2% order via . Among the available sales channels, online marketplaces and online shops rank highly among Australians. As a result, only 9.1% and 13.8% of customers have not used these mail order options in the last 12 months. The traditional print catalog loses out, with only half of customers ordering this way. Attitudes towards teleshopping are largely conservative (64.2% non-users in Australia versus 60.2% globally). CUSTOMER JOURNEY PLACING ORDERS Online PC Online mobile (tablet, smartphone) By telephone In writing (by post, fax) By Order in store & delivery to home Order channels Australia * Source: DHL Global Mail 2013 n Global from 9,270 to 9,446 n Australia from 413 to 422 Online shop of a manufaturer or retailer Online marketplace Mail order company from which I received a catalog Merchant who advertises on TV Use of different suppliers Never Seldom Occasionally Frequently / very frequently Australia

26 Country information Australia Shop the World 25 Online payment wins Online payment systems like PayPal are clearly preferred by Australian distance selling clients: 61.9% use them frequently to very frequently (33.7% globally). Unlike the global average, Australians have less of a preference for payments made by invoice, cash on delivery, prepayment, direct debit, or credit card. However, debit cards are used more often (22.7% frequent use in Australia versus 18.4% globally). Installment payment/credit financing is seen only rarely in the Australian distance selling business: 87.8% of customers say they never buy on credit (compared with 78.0% globally). CUSTOMER JOURNEY PAYMENT METHODS Payment options Credit card Cash on delivery Prepayment Direct debit Invoice Online payment systems Australia Never Seldom Occasionally Frequently / very frequently Installment purchase / financing Debit card * Source: DHL Global Mail 2013 n Global from 9,218 to 9,324 n Australia from 412 to 417

27 Country information Australia Shop the World 26 CUSTOMER JOURNEY DELIVERY Speed is relative Requirements for delivery Ø *,** Australia The option of selecting the shipping company The vendor only works with reliable delivery companies Given Australia s geography, speed is relative as can be measured against customers delivery expectations. In some areas, it may take up to two days longer for a parcel to arrive. Expectations regarding transport are generally slightly lower compared with the global standard. Detailed information regarding delivery period & delivery date when ordering Fast delivery Free delivery Max. accepted order time Ø in days * Tracking information Australia Delivery to a retail store Delivery to a parcel locker or drop box Other collection points (supermarket, kiosk, gas station) * Source: DHL Global Mail 2013 n Global from 10,270 to 10,462 n Australia from 454 to 471 ** scale from 1 "absolutely not important to 6 "very important

28 Country information Australia Shop the World 27 Returns are not an issue Only 15.6% of distance selling clients in Australia return ordered goods. This is more than 10 percentage points below the global average of 27.5%. Both the per capita returns (0.4 versus 0.8 globally) and the return rate of 3% are significantly below the global average. The reasons for a return can differ greatly: Australian consumers do not hold back if a product is found to be defect (41.9% versus 32.3% globally). Far less often, an item is returned because it does not fit (24.5% versus 37.7%) or because several sizes were ordered to allow a better choice (6.1% versus 15.5%). CUSTOMER JOURNEY RETURNS Percentage of users who returned goods Australia Number of returns per capita per year Ø * Australia Yes No Reasons for returns * Australia in % Defective product 41.9 Deficient product quality Differing product description Delivery of the wrong product Wrong product was ordered Product did not fit Product was not liked Return rate Australia Ordered multiple variants to choose from Delivery period too long Found less expensive product * Source: DHL Global Mail 2013 n Global from 2,648 to 9,325 n Australia from 65 to 417

29 Country information Australia Drivers & barriers in distance selling Cross-border shopping Shop the World 28 A host of good reasons Autonomy of time and place, pricing, and delivery options are arguments in favour of ecommerce in Australia. A noticeale drawback is consumers concern regarding unknown product quality. DRIVERS & BARRIERS IN DISTANCE SELLING High delivery costs Uncertain delivery Barriers Australia in % * Concern about misuse of payment data Drivers Australia in % * No demand because all products are obtainable locally Product can only be obtained via distance selling Easy price comparison Long delivery periods Unknown product quality No try-on possible before purchase Shopping 24/ Complicated return of the products Location-independent ordering No personal advice Higher product quality No personal contact person for problems Lower prices Greater selection Doubts regarding data protection or the dissemination of data to third parties Option to deliver to a preferred location * Source: DHL Global Mail 2013 n Global from 10,509 to 10,864 n Australia from 470 to 512 Concern about counterfeited products, product piracy

30 Country information Australia Drivers & barriers in distance selling Cross-border shopping Shop the World 29 Shopping without limits In Australia, cross-border shopping is taken for granted: 80.1% of consumers have ordered from abroad - a figure far exceeding the global benchmark of 51.2%. The English-speaking countries of the US and Great Britain are especially popular. Orders are also placed with suppliers in Asia, primarily Hong Kong and China. Australians want to continue to use these markets and are also turning to Japan for ordering abroad CROSS-BORDER SHOPPING OVERVIEW Use of cross-border ecommerce Yes, already ordered ** No, but future orders planned No, no future orders planned Previous and future orders abroad by country Australia Previous orders abroad USA [77.4] Great Britain [58.0] Hong Kong [45.0] Future orders abroad USA [85.5] Great Britain [73.4] Hong Kong [54.2] 4 China [43.9] China [53.3] 5 Other Asian countries [17.4] Japan [34.9] * Source: DHL Global Mail 2013 n Global from 4,738 to 8,807 n Australia from 359 to 438 ** split into "further orders planned 78% Australia and "no further orders planned 2.1% Australia

31 Country information Australia Drivers & barriers in distance selling Cross-border shopping Shop the World 30 Price-driven purchase When compared with the global trend, the main driver for ordering abroad is a lower price. In contrast, product quality (13.4% versus 24.2% globally) plays only a subordinate role. Lack of product availability on the domestic market and greater selection are also key factors. CROSS-BORDER SHOPPING DRIVERS & BARRIERS High delivery costs Language problems Customs clearance Non-transparent costs Uncertainty with problems Barriers to ordering abroad Australia in % * No demand because all products are obtainable locally Long delivery times Drivers for ordering abroad Australia in % * Unknown product quality Products not obtainable domestically Complicated return process Higher quality of the products Concerns regarding data protection Lower prices Fear of fraud Greater selection Assurance against product counterfeiting Uncertain delivery Concern about misuse of payment data Uncertainty regarding warranty terms, payment process, legal situation, etc * Source: DHL Global Mail 2013 n Global from 7,289 to 10,689 n Australia from 410 to 495