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E-Commerce Australia: A Research About the Australian Market

Our global e-commerce journey continues with the Australian e-commerce market. After reading this blog post, you’ll have all the info of the online retail market trends in Australia. If you’re ready, let’s start.

Australian economy in a nutshell

Australia is home to 24.93 Mn people, most of whom live in an urban city. It is one of the most developed countries in the world and it is ranked as the third country in the Human Development Index (HDI).

  • GDP/capita: $48,480.
  • GDP growth of 2.835% (annual)
  • Dominated by the service sector
  • Main exports: agricultural products

Robust economic growth is set to continue according to an OECD report. However, due to the global slowdown in growth, the Australian economy will moderate slightly in 2020.

Now, let’s have a look at the promising e-commerce market in Australia.

Australian E-commerce Market

This year, 17.90 Mn Australians shopped from an online store, generating $20.694 Mn of revenue in 2019. 15.1% of revenue growth is forecasted for online businesses by the end of 2019, and a 5% increase in online shoppers is expected. In two years, the market size is expected to hit $35.2Bn.

According to the Australian Postal Corporation, consumer expectations around rapid or time-specific delivery raise over time. An easy and/or free return service is highly recommended if you want to expand your business in Australia.

Trends in Australia’s E-commerce

Online travel services dominate e-commerce in Australia, as in many other countries. Annually, $10.67Bn spending goes to travel services, while another $6.595Bn goes to fashion and beauty products. Interestingly, an annual change of 26% is expected for fashion and beauty products, a number much higher than the 6% change in the consumption of travel services.

  • Electronics & physical media is the third biggest category in the Australian online retail market.
  • A rough 47% of the online payments are via credit and debit cards, and PayPal operates 29% of the payments. By 2023, e-wallets will account for 37% of the payments.
  • 60% of consumers prefer sustainable packaging, and another 50% would pay 15 cents for it.
Purchase by Category Australia 2019

Advantages of the local market

There are 21.774 Mn internet users in Australia, which is equal to 87% of the population. It is one of the highest internet penetration rates in the world. 72% of Australians have social media accounts. High internet and social media penetration rates allow businesses to flourish with the right marketing strategies. Furthermore, there 76% of the population purchase products or services online. This means that there is a tremendous potential of people online that could be converted into consumers.

In January 2019, online shopping accounted for 9% of the total retail in the country. In July 2019, McKinsey&Company published a comprehensive analysis of the Australian retail market called Retail Ghost Town. The report suggests that there is a general trend of customer migration to online channels.

  • Homewares & furnishings, leisure & personal goods, apparel & footwear, and department stores will experience a 10% decrease in their selling space.
  • 56% of all the shoppers stated that online is more convenient than stores, while another 62% pointed out the better product range of online stores.
  • 45% of online shoppers expect the online store to be 10% cheaper than in-store, according to a GFK survey.

Must-know facts to improve your sales

The cost of delivery is the main barrier to online shopping, according to 50% of the participants of the GFK survey. You might consider owning the shipping costs, it might give you important leverage.

Even though online shops are cheaper, 49% of the consumers in Australia prefer to see the product in-store. If you are selling fashion products, there is a solution to that: Give your customers 7 days trial. Consider it as a demo product. After your customers received the products, they could be able to return the ones that don’t fit. This way, you can compensate for the absence of a physical store.

Another 62% of the consumers say that they are more concerned about the security of personal information when shopping online. Your website should express your sensitivity on the issue, and your payment methods should conform to the security expectations of the customers.

A brief overview

With this blog post, we have extended our knowledge of Australia’s e-commerce, which could help us expand our business to this growing market.

To sum up, let’s address our main findings:

  • High internet penetration rate: 87%
  • Consumers that find online shops more convenient: 56%
  • 10% shrink forecasted in the selling space(physical stores)
  • 15.1% growth in revenue expected for online businesses
  • More than half of consumers care about sustainable packaging.
  • Security of personal information is a major concern among consumers

Hopefully, this blog post will be helpful to new market entrants and business owners that are curious about the Australian e-commerce market. Don’t forget to improve the sustainability of your business, and try to establish a trust relationship with your customers regarding personal info.

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