Economic downturn driving consumers and distributors to online shopping
Price-conscious kiwi consumers and nervous distributors are looking to online shopping sites like TheDeal.co.nz to help tighten belts
25 February 2010 - Online shopping has changed the face of consumer spending in economic tough times, says TheDeal.co.nz CEO Paul O’Shannessey.
The ongoing downturn means that consumers are hungry for deals, and distributors are eager to liquidate stock. “Christmas 2009 saw a change in retail patterns,” says O’Shannessey. “Suppliers to The Deal began to heavily discount products pre-Christmas. In a normal year, they would save large reductions on brands to Boxing Day sales”. And, he says, consumers were more than happy to take advantage of earlier discounts in time for Christmas.
O’Shannessey says that suppliers’ central consideration is how to remain agile in the market, and the online shopping approach fits these needs. “In the past, many distributors have opened clearance warehouses to move old stock,” he says. “This year, they chose to sell online because the overheads involved in opening new physical stores are prohibitive”. O’Shannessey has found that suppliers favour The Deal’s no cost to list, commission upon success model, because it involves considerably less risk and outlay than the cost to list model of sites like Trademe.
At the same time, a new frugality is pushing consumers online. Recent figures from TheDeal.co.nz show that visitors are spending more time on the site – and more time searching for solid deals. “Consumers are a lot picker this year,” says O’Shannessey. “They are watching their dollars, but they are scrutinising the products more seriously as well. The goods have to stand up to close investigation”. He says that The Deal’s focus on getting high quality brands at low prices attracts this type of shopper. “They are looking to save money, but they still want to live. Online shoppers are searching for the same quality they usually expect, but at considerably lower prices.”
The Deal’s experience is reflected in the global retail market. According to a recent Penn, Schoel & Berland Associates survey, 26 percent of consumers who believe that their personal finances will worsen this year say they plan to do more of their shopping online. Overall, 34 percent of people surveyed intend to spend more online this year. The primary consideration for most is finding the best deals.
O’Shannessey says that New Zealand retailers are worried that kiwis have now been conditioned to buy only when products are on sale. “While the trend is concerning, in this sense The Deal is well placed to make the most of it, because we are the last stop for products – everything on the site is at the lowest possible price.”
About The Deal
TheDeal.co.nz is New Zealand’s largest online discount store. The site was founded as a place for quality brands to move their excess stock, and for consumers to purchase those products at outlet prices. The Deal now offers more and more current retail products, always at deep discounts.