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Australian online sales trend
- Food For Sale
Australian online sales trend
More Australians are buying online. So far, in 2022 homeware and appliances have had the highest expenditure. It accounts for 23.8 percent of online sales. It is then followed by online stores with department stores at 16.3 percent. Thus far, grocery and liquor purchase are at 15.3 percent followed by personal and recreational sales at 12.4 percent. It may appear little surprising with fashion purchases at 10.9 percent.
Online business has been booming since the start of the pandemic. Like all over the world, the pandemic led to an e-Commerce explosion down under too. Soon after few months of lockdown lifestyle, Australian e-Commerce surged to new levels.
International market
So far, international online retailers and marketplaces with a foothold in Australia saw the biggest sales growth. For example, Amazon Australia had a sales growth of 87 percent in comparison to the previous year. Hence, Catch and Kogan sales increase was 43 percent and 42 percent respectively. Australian platforms had seen huge hauls too. Woolworths, domestic e-Commerce taking was USD$1.7 billion whereas Coles Supermarkets takings were USD$981 million in 2020. These sales were predominantly national sales.
In keeping up with the trend, Australian SMEs increased their digital marketing expenditure. Thus far, almost 74 percent of SME advertising funds went on online marketing throughout the pandemic. It was an increase of about 67 percent from previous year. Almost 34 percent new e-Commerce websites were launched in this period too.
Aussie consumer behaviour
These trends helped change Aussie consumer behaviour. It changed the way Aussie consumers paid online too. Hence, after March 2020, use of digital wallet grew by 90 percent. Buy now, pay later services grew in popularity too. The market leader, Afterpay recording a sales increase in active customers throughout 2020. Thus far, overall e-Commerce explosion continued into 2021. However, as lockdowns lifted, there was slight slowdown on the growth. Aussie dollars slightly shifted to bricks and mortar stores.
Despite this, more than 80 percent of Australian households bought something online. This experience was across the year in 2021. Thus, driving the national year-on-year sales growth to 12.3 percent. It was little subdued in comparison to 2020 sales. Thus far, it was still double the pre-pandemic base sales.
Sales in 2022
So far, in 2022 all explosions have had an aftershock. Thus, the global e-Commerce boom experiences the same. In fact, after years of decline, online prices are on the increase. It appears to be everywhere because of supply chain challenges and inflation. So far, inflation is hiking up prices for e-Commerce enterprises.
For example, in March 2022, prices hit a record 3.6 percent rise. However, by May 2022, it had steadied out. It was still worrying at 2 percent. Each month in 2022, an average of 5.4 million households bought something online. It is the same average participation as it was in 2021. There was a steady growth in May. Online purchases grew by 10.9 percent year-on-year. Thus, it was 9.8 percent higher than in April.
Decline starting
According to the latest National Australia Bank (NAB) Online Sales Index, a decline is showing. In May, on seasonally adjusted basis on a month-on-month, NAB Retail Sales Index contracted by 0.9 percent. It follows on from significantly revised contraction in April by 1.3 percent. So, other than a little respite in January 2022 following new wave of Omicron, this drop has been a trend since October 2021.
However, it coincides with ending of lockdowns in most states too. Thus, it supports broader rebound in store sales. Albeit slowing, year-on-year terms remains positive. Hence, there is no panic on current trend. It is not surprising considering the increase in shipping costs it is impacting online retailers.
Inflation challenge
There are high levels economic uncertainty worldwide. Thus far, it will impact the landscape into 2023. According to Deloitte, the inflation challenge is now a reality. As such, majority of turnover growth will be driven by prices rather than volumes. This may be the trend for next few years.
Consumer Price Index (CPI) growth for non-discretionary goods and services is already up 6.6 percent. This will leave consumers with less discretionary cash. Thus, leading to lower lifetime value of customers and higher acquisition costs as businesses.
