The State of Australian eCommerce 2018
Australian e-commerce is rapidly evolving as we fall further in love with online buying. As many as 4.6 million Australians accessed Amazon US in October 2017. Amazon US ranked second in terms of unique visitors, whilst Woolworths was visited by 6.7 million Australians.
Statista estimates that Australian ecommerce market revenue will hit $11,789M in 2018 with Fashion being the top category expected to see revenue growth of as much as 13.36%.
These trends are a clear indicator that Australians will continue spending online in coming years. This makes Australian ecommerce an attractive market for both local and international businesses. As a business, you need to start planning now to get your share of the massive Australian ecommerce industry.
The following trends, statistics, and opportunities will help you better understand what’s coming your way and how you can prepare your business.
Key trends and statistics
Here are a few key trends and stats that have recently reshaped the Australian ecommerce landscape and will have a major impact on the ecommerce sector in coming years.
- Retail ecommerce sales in Australia will cross $11 billion in 2018 and will cross $16 billion by 2022. (Source)
- Homeware, media, personal, food, and fashion are the top five categories where Australians love spending their money. (Source)
- Australian ecommerce has 1.80% share in GDP. (Source)
- Australia ranks second on the global e-government index, 13th in the ease of doing business index, and 16th in logistics performance index. (Source)
- With more than 19.4 million mobile users, Australians prefer shopping from their mobile phone. (Source)
- Forty-five percent Australians purchase a product online from their mobile or tablet on a monthly basis while 27% did weekly and 5% make a purchase daily. (Source)
The way Australians shop online has changed significantly in recent times. The change in consumer buying behaviour coupled with other macro and micro trends has reshaped how you need to conduct business in Australia.
Trends show that consumers prefer buying late in the day. Some 29% of Australians purchase between 7-10PM while 18% purchase between 2-5PM. There is a whopping 52% year over year increase in online purchases via mobile device.
Your ecommerce store has to be optimised for mobile and it’s imperative to ensure your IT team never rolls out a maintenance between 2pm to 10pm.
Most of the ecommerce traffic comes from Google via Adwords and SEO which is best handled by a reputable SEO agency.
Demand for personalized products and services has increased significantly recently. There has been a 28.2% growth in personalization for consumer products, and it is expected to rise. If you’re not offering personalized products to your customers, they will buy elsewhere preferably from an international store.
As many as 33% of Australian e-shoppers buy abroad due to better availability of products while 32% buy due to the appealing offers.
There is little room for mistakes. Your target audience is smart and they’re ready to switch if you don’t offer them what they’re looking for.
Online spending is dominated by people aged between 35 and 44. Growth for two age groups 35-44 and 45-54 is strongest. Australians aged 35-44 have 24% online spend share which is the highest amongst all age groups.
Homeware and appliances are the category with the highest share of spend across all age groups. Interestingly, all age groups online spend share is almost equal for domestic and international but 18-24 is the only exception who tend to spend more on international stores than domestic stores.
Australia’s eastern states dominate their counterparts in terms of online spend share. NSW, VIC, and QLD are the three states with the highest spending share accounting for 77% of total online spending.
Metropolitan residents purchased 74% of all online products last year as compared to regional residents.
The three top growing retail ecommerce industries in Australia are:
- Homeware and appliances
- Personal and recreation
These three categories account for 85% of total online spend.
Department and variety stores have the highest online spending share across all types of ecommerce stores accounting for 30.1% with a 7% growth rate.
Clothing is the most popular product category among Australians while travel is the most popular service category.
There is a strong correlation between online shopping events and buying behaviour. Ecommerce sales spike during domestic and overseas shopping events such as Mayhem and the Vogue, GQ online shopping nights, Christmas, Merry Monday, Black Friday, and others. Christmas is the largest and most popular online shopping event in Australia while December is the largest buying month.
Last year on Christmas, domestic ecommerce stores delivered 34 million parcels whereas 5.6 million parcels were received from abroad. There was 13% increase in growth of parcels on Christmas. Games and Toys is the most popular category between October and December. As much as 41% of annual online purchases in Games and Toys category occur in October, November, and December.
Opportunities for businesses
So what’s in it for you, being a local ecommerce store owner?
Well, there are a lot of opportunities for all types of domestic ecommerce businesses.
- Statistics show that 30% Australians don’t trust foreign sites and 29% prefer buying from domestic sellers. This makes it easier for domestic ecommerce stores to stay ahead of their international counterparts.
- Online spending is increasing every year. If you haven’t started selling online, it is the best time to get started. Your target market is already buying online.
- Eastern states should be your business’s focus because this shows the highest concentration of spend online. Residents of certain states spend significantly more than the residents of other states. For instance, NSW residents spend 30% more online than Victoria residents.
- Optimize your online store for mobile as the majority of the Australians buy from their mobile phone.
The Australian ecommerce industry has a lot to offer. The good news is that Australians love buying from local online stores. All they need is a personalized product that they can easily order from their mobile device with strong customer service follow up. If you can do this, Amazon or any other international ecommerce store is unlikely to steal your sales.