Search shapes Australian ecommerce

18 August 2011

SYDNEY: The online retail market in Australia could soon be led by a "small number of dominant players", not least because of the influence of search engines, a study has argued.

The Australia Institute, a think tank, surveyed 1,084 web users, and found 46% agreed the order in which search results appear nhyeither "sometimes" or "always" influence their purchase decisions.

"The more that one search provider dominates the market, the more that its own algorithm - and any idiosyncrasies that may be built into it - will shape online behaviour in arenas far beyond search," the study warned,

According to the analysis, 37% of participants were "unaware" services like Google and Bing contained paid-for ads, and just 15% of contributors looked beyond the first page of results during their most recent search.

Among the 29% of respondents believing they had a "very good" understanding of how sites such as Google work, 34% did not realise rankings would change if they switched to a different search engine.

Meanwhile, 42% of this group thought relevance was a more important factor than paid advertising in determining what appears at the head of search results, and 27% did not know paid-for ads are typically the top listings shown.

Overall, 62% of Australians stated a preference for accessing a larger number of sites, including some they were unfamiliar with, whereas only 26% might favour a limited range of well-known properties.

A further 63% of interviewees would be happy for the government to intervene if necessary to ensure the web stays competitive, with the remainder keen for this channel to develop free from interference.

When considering a purchase without a set product in mind, 47% of the panel first turned to standard search sites, 27% visited "vertical," specialist search services - like Expedia in the travel category - and 19% opted for a retailer's online hub.

Upon seeking a pre-identified item, 46% logged on to a "vertical" search site first, 24% went straight on to a retailer's ecommerce website, and 23% accessed a standard search platform like Yahoo.

"Search engines such as Google, Yahoo! and Bing have become an essential service much like electricity, telephony and banking," said Dr Richard Denniss, The Australia Institute's executive director.

"Unless regulators pay more attention to the need for online diversity, and there is greater understanding of how search engines function, online retail could come to resemble today's shopping centres, in which the appearance of choice exists but actual choices are limited."

Data sourced from The Australia Institute; additional content by Warc staff