Monday, 30 July 2018 19:25

Stripe research: Australia at 'tipping point' for marketplace businesses

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Online payments company Stripe says "adoption of rideshare and food delivery in Australia is greater than the UK and the US, but well behind regional neighbour Singapore".

Stripe, an online payments technology company that bills itself as building "economic infrastructure for the Internet", has released a new report showing that "multi-sided marketplaces are changing how consumers shop, travel, eat and commute in Australia, with more changes to come".

The company says that "using technology to facilitate online transactions between multiple third-party buyers and sellers simultaneously, these online marketplaces — such as Catch.com.au, SEEK, Deliveroo and Vinomofo — are providing consumers with greater convenience in their daily lives, becoming preferred options".

Billed as independent research, conducted by Nielsen for Stripe across nine countries, we're told it shows that "the rapid rise of marketplaces is driving the next wave of growth online, and identifies the key requirements for success in Australia".

So, what of this "tipping point for marketplace adoption in Australia"?

Here, Stripe's report explains that "consumer preferences in Australia show a notable shift. Half of Australians (50%) surveyed said that they prefer using online marketplaces for transportation, hospitality, and food delivery/subscription, versus going direct to taxis, hotels or restaurants. This is higher compared to just 34% and 39% in the UK and US, respectively, but much lower than Singapore, where 73% reported the same".

"The research found just over half (51%) of Australians said that they spend more money on online marketplaces nowadays. This is only slightly behind the US (56%) and UK (56%), where many well-known consumer marketplace sectors have been established for longer.

"Looking more closely at specific sectors, in the past year 64% of Australians reported using an eCommerce marketplace to buy or sell, nearly a third (31%) reported using hotel or hospitality marketplaces, and about a quarter reported using food delivery (24%) and rideshare services (23%). Only 12% reported using marketplaces for restaurant reservations, compared to other markets like Hong Kong (36%), Denmark (26%) and Singapore (21%), showing opportunity for this category to catch up."

John Henderson, partner, Airtree Ventures said: "This research from Stripe makes clear what we all know from personal experience: consumer preferences have changed. Australians have been delighted by the experience offered from local and global marketplaces.

"We now expect to be able to transact and access most services seamlessly online and via mobile – this is a challenge and an opportunity for businesses both new and old, and those that can offer the best customer experience will win. It’s precisely what we focus on when making a decision on whether to invest in an up-and-coming marketplace business. The most sophisticated founders, that will go on to have greater impact in our economy, have razor focus on customer experience and technology."

Fast, secure and frictionless mobile experiences a key driver

"Three quarters (75%) of Australians made a purchase over the Internet in the last month, according to the survey. Of particular note is that 48% of people identified digital wallets and regional payment methods like Apple Pay and Android Pay as their preferred payment method for online purchases, compared to 29% listing credit cards, and 19% listing debit cards.

"This preference or desire is quite different from the reality – in the past year, only 7% of Australians reported using Apple Pay or Android Pay, and 6% reported using Samsung Pay. However, the economic opportunity for mobile payments in Australia looks promising: 30% of Australians said they would be more likely to visit a website or app if it offered digital wallets like Apple Pay. This figure jumps to 43% for millennials. This suggests a clear opportunity for businesses looking to grow and increase conversions online.

"When it comes to ridesharing marketplaces, 85% of reported usage was on mobile devices. This was 61% for food delivery, 27% for hotels and hospitality and 26% for eCommerce marketplaces."

Stripe's research found that "fast, secure and frictionless mobile experiences have been key in driving these changing consumer behaviours and preferences, with Australians looking for these experiences at check-out".

"Half of those surveyed said they will leave a website or app without purchasing anything if it takes too long to enter payment information, and 70% said it’s important to not have to enter their credit card details every time they make a purchase. In fact, 22% stated that if a website or app doesn’t remember their credit card, they will leave without purchasing anything."

Levi Aron, country manager Australia, Deliveroo, said: “It takes many ingredients to make a successful consumer business like Deliveroo. For our consumers, the experience needs to be smooth and exciting, for riders, work needs to remain flexible, and for restaurants, our partnership needs to be seamless. This is what our tech developments are focused on. It’s critical we continue to provide the most frictionless, attractive and convenient experience for our consumers and all those we work with.”

Ryan Gracie, chief marketing officer, Catch Group, said: “Our goal is to provide the best in-stock products and a long list of marketplace options across all categories, so creating personalised, seamless shopping experiences — particularly when consumers are ready for purchase — is key to our success. Working with Stripe allows us to create this for our customers, enabling them to shop on Catch through any device quickly, securely and with minimal fuss". 

So, what does Stripe says is next for online marketplaces in Australia?

Considering the substantial impact they are having on daily life in Australia, Stripe says "it’s unsurprising 71% believe marketplaces are beneficial to the economy. Of those, 71% believe marketplaces give consumers more options, 52% believe they help small businesses reach more consumers, 58% believe they increase competition between businesses, 41% believe they provide more flexibility to part-time workers, and 36% believe they help create more jobs.

"Marketplaces aren’t just creating new ways for Australians to buy things, but they are opening up new ways to make income. In the past year 26% of Australians (the highest percentage among countries surveyed) used an eCommerce marketplace to both buy and sell, while a third of those who indicated using personal chores marketplaces, used it to sell their services."

Mac Wang, head of Growth, Australia & New Zealand, Stripe concluded: “We’re starting to see the real transformative impact of the internet with the growth of these multi-sided marketplaces. These marketplaces aren’t just changing the way we travel, shop and commute, they are fundamentally changing the internet economy, creating new commercial experiences that cannot exist in the offline world and driving the next wave of growth online.

“One of the key advantages these business models have is that they can achieve remarkable scale very quickly. Marketplaces are also incredibly complex, needing to manage multiple pay-ins and pay-outs simultaneously. We continue to develop tools that make it easier for these businesses to scale online to make managing these complicated fund flows simpler and more seamless for their users in Australia and around the world."

The study "was conducted online by Nielsen in January 2018 among 1000+ adults, 18 and older, in the US; and among 500+ adults, 18 and older, in Australia, France, Germany, Hong Kong, Japan, the Netherlands, Singapore, and the UK. Where applicable, local examples of ride-sharing platforms, food-delivery services, e-commerce, and other multi-sided marketplaces were used in individual country surveys".

The full report is available here

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Alex Zaharov-Reutt

One of Australia’s best-known technology journalists and consumer tech experts, Alex has appeared in his capacity as technology expert on all of Australia’s free-to-air and pay TV networks on all the major news and current affairs programs, on commercial and public radio, and technology, lifestyle and reality TV shows. Visit Alex at Twitter here.

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