The growth of Australia’s online retail industry is being driven by customers looking for a bargain.

Consumers were spending $15.9 billion on internet shopping in 2011, representing 64 per cent growth over 2010

And retailers are responding to this trend by offering discounts, group buying specials, daily deals and clearance sites, according to technology analyst firm Telsyte.

Surveying more than 1100 local consumers and covering more than 350 local online retailers across 18 categories, Telsyte expects the online retail market to continue growing strongly and exceed $30 billion by 2016.

Sam Yip, Telsyte senior research manager said technological changes and economic conditions are accelerating the concept of discount online shopping.

“Retailers have spent the past few years trying to find the best way to drive their online strategy, and it is now evident that offering discounts is the main lever to get Australians to spend,” he says.

In less than 24 months, Australian consumers have been offered a multitude of new ways to shop online with group buying sites, daily deals sites, consignment sites, shopping comparison sites and mobile shopping applications.

“We have seen the home pages of retailers shift from focusing on product range to discount specials, either through a dedicated clearance page, daily deals section, factory seconds lists, or pre-owned goods.”

In 2011, the top digital retail categories were travel, groceries and fashion, with a combined share of 73 per cent of the total online retail industry revenue.

The study found that just under a quarter of eCommerce revenues flowed to overseas retailers varying between 8 per cent and 40 per cent depending on the category. This trend is expected to continue with the strong Australian dollar.