Online shopping habits: A study of generational variances in Australia

In this article, Capterra surveyed 5,585 respondents across multiple countries to compare how Australians shop online and analysed the generational differences to gain insight into their habits and preferences. Find out how businesses can leverage the right tech to reach their target audience online. 

The 2024 federal budget has made provisions for tax cuts and cost-of-living relief to help alleviate rising household expenses, but for many inflation has already led to changes in spending habits.

The cost-of-living crisis in Australia is presenting numerous challenges for businesses. Due to inflation, households are contending with escalating expenses in essential items such as groceries and utilities, and cutting back in other areas. While consumers struggle under the weight of inflation, businesses still need to find ways, such as optimising their marketing strategy with social media marketing tools to locate and attract new customers.

To gain insights into how businesses can strategically target specific age groups online and drive conversions, we will evaluate how Australians from different generations start their online search for new products and which online channels they make purchases from. Additionally, we will evaluate the factors that influence how different generations make purchases and how businesses can optimise the buyer journey from search to purchase.   

We surveyed 497 respondents in Australia, which was part of a wider, global survey consisting of 5,585 respondents from multiple countries. In some cases, we will compare data to other countries where the Capterra study was conducted. For the purpose of this study, baby boomer and Gen X respondents are combined and referred to as “older generations” when compared with millennial and Gen Z respondents.The full methodology is available at the end of this article. 

Where do different generations prefer to initiate their online search for new products?

Overall, 82% of Australians begin their online search on internet search engines when shopping for new products or services. The use of internet search engines is a traditional method of finding products or services online, which may indicate that Australians prefer tried and tested routes over other ways.

However, despite internet search engines being the most popular place to start a search –even among all generations– there is a considerable difference in use across different generations. Of the older generation respondents, 86% say they use search engines to seach for new products and services, followed by millennials (82%), and finally Gen Z (76%). 

In contrast, there is a noticeably higher use of social media platforms to search for new products and services among Gen Z (47%) compared to millennials (27%) and older generations (24%). Although social media platforms are favoured by Gen Z, the popularity of particular social media platforms also varies across generations. Of those respondents that use social media to search for products online, TikTok is the most popular platform for Gen Z, whereas millennials most commonly visited Instagram as the place they seach for new products or services, and older generations most commonly visited Facebook in the past year.

This suggests that Gen Z may gravitate towards more visually engaging, short-format video content on social media platforms for product discovery or may be drawn to authentic user-generated content and influencer endorsements. On the other hand, older generations may rely on familiar search engines and social media platforms, whereas millennials are perhaps caught in the middle and are reluctant to embrace newer social media platforms. 

Which online channels are popular among generations for making purchases?

While it is important to know where your target audience begins their online search for products and services, it is equally important to know where your potential customer will likely end up making a purchase and how the buyer journey varies across generations. 

Predominantly, 70% of Australian online shoppers say they typically end up purchasing from individual retailer websites or apps.

Individual retailer websites or apps are also equally popular among different age groups for making a purchase online. Online consumers who buy products or services directly from the retailer's website or app may do so for a variety of reasons, such as brand trust and familiarity, personalised shopping experiences, exclusive offers and discounts, or customer support. 

However, there are significant disparities between age groups for respondents who say they typically end up purchasing from eCommerce marketplaces and department store websites. As you can see in the graph above, older generations were more likely to cite eCommerce marketplaces, such as Amazon,  than other generations. 

Notably, only 10% of all respondents end up making a purchase on social media platforms, even among Gen Z respondents, despite being popular to search for new products and services. 

What are the primary factors influencing purchase decisions online?

Capterra’s 2023 Consumer Trends eBook highlighted about 8 in 10 (82%) of Australians have changed their spending habits due to the economic situation. In the current study, just over two-thirds (68%) of Australian respondents say ‘lowest prices’ has been the most influencing factor when making a purchase decision online in the past 12 months, compared to the global average of 59%. Comparatively, Australians are seeking lower priced products ahead of all other countries that participated in this survey, which may emphasise the cost-of-living crisis in Australia. 

Additionally, 67% of Aussie respondents frequently cite available discounts or promotions as a top influencing factor when it comes to buying products and services online over this past year, again highlighting budgetary constraints. Both factors —lower prices and available discounts or promotions— are equally important factors across all age groups. 

Cheap products have gained an extraordinary presence in the Australian market as cost-of-living pressures have been driving budget-conscious consumers to search for lower prices. Low-cost fast-fashion retailer Shein generated a 308% lift in profits over the past year, making it one of the biggest clothing retailers in Australia since its entry into the market less than three years ago. 

When we asked respondents who tend to make purchases from the same brand what motivates them to repeat purchases, 77% of Australians cite quality, only slightly ahead of price (76%). This may imply that Australians are blurring the line between quality and price and face no other option but to seek cheaper, lower-quality products due to the current economic climate.

Similarly, 87% of respondents who tend to make purchases from different brands say price is a motivating factor for shopping around. However, lower prices motivate older generations (92%) the most compared to millennials (87%) and Gen Z (81%) respondents. Significantly, a higher proportion of Gen Z respondents say they would be susceptible to online advertising (32%) and recommendations on social media (42%) if they were to try a different brand or retailer, compared to other generations.

How can businesses optimise the end-to-end customer journey from initial search to purchase? 

Businesses that understand their customer journey can better locate and attract new customers. As seen from the data presented above, knowing where your target audience initiates and converts online, as well as what influences them, is crucial in order to nurture them every step of the way. 

A seamless and optimised end-to-end customer journey involves a comprehensive approach that integrates various aspects of marketing and customer experience. Businesses can follow these five steps in order to refine the end-to-end customer journey:

1. Develop detailed buyer personas: Start by identifying who your target audience is and create accurate buyer personas. These personas should reflect your customers needs, preferences, behaviours, and pain points.
2. Map the customer journey: Understand the steps customers take from becoming aware of your brand to making a purchase. Customer journey mapping tools make it possible to visualise and analyse the customer experience across all touchpoints and channels throughout the journey.
3. Enhance brand awareness: Use targeted messaging, consistent branding,  and content that speaks directly to your buyer persona’s interests and needs. This could involve SEO practices, content marketing, social media advertising, and email marketing.
4. Analyse and measure performance: Leverage analytics to identify which marketing channels and content types resonate best with your audience, allowing for a more efficient allocation of resources.
5. Carry out continual optimisation: Regularly review and update your customer journey map and marketing strategies based on customer feedback and market trends.

Why the right technology is crucial to funnel your target audience

Internet search engines are still preferable to initiate searches for Australian consumers when shopping online compared to other countries that participated in this survey. Therefore, businesses must bear in mind their specific target audiences, such as older generations on internet search engines. As such, businesses should focus their efforts to optimise the visibility of their content with SEO tools to funnel consumers to their websites.

On the other hand, the popularity of social media platforms among Gen Z, and even specific platforms for each generation, can be a great avenue for reach and organic discovery of new products and services. Additionally, focusing on a social media marketing strategy motivates younger generations to try new products or services beyond price. However, due to low conversion rates on social media platforms, businesses should place more emphasis on driving conversions by funneling leads to their individual retailer websites. 

In the next article, we will look at data-driven eCommerce strategies that include the use of user reviews, loyalty programs, and influencers to engage and connect with prospective customers to drive conversions on individual retailer websites.