Australia eCommerce Market Reaches Record $21 Billion

Australia Post released research on the country’s shopping habits and estimates that Australians spent a record $21.4 billion on goods online in 2017. That is an increase of 18.7 percent over 2016 and outstripped physical retail by 16.2 percentage points.

Don’t Miss

• Do you need a business bank account for your online business? Have a look at our review of the five best bank accounts for sellers, some of which are free with no minimum balance or deposits.
• AI can change your entire social media game today. Learn how you can save time writing engaging content faster. ^[sponsored]
• How to lower your taxable income and pay less in taxes. ^[sponsored]
• ‘My Community Made’ is a new marketplace to compete with Etsy and Amazon Handmade.
• EXCLUSIVE: Interview with Chris Prill, VP eBay Motors, discussing the new Guaranteed Fit program.

While shopping the shopping behavior is changing from traditional retail to online retail, the traditional retail sector, excluding cafes and restaurants, still accounted for $267.4 billion spent in 2017.

When it comes to the number of purchases, the growth is even more pronounced. Purchases were up 19.2 percent in 2017, after an 11.5% rise in 2016.

The report estimates that by 2020, one in 10 items will be bought online in Australia. Australians are buying online more frequently, but spending slightly less per purchase.

The changing online landscape is likely pushing the average order value (AOV) down as more shoppers are looking online for everyday items.

Amazon’s entry into Australia has not really been a factor in this report as it happened very late last year. But Amazon certainly will bring more pressure on the market on AOV as it has done in many other countries.

Where are Australians Buying Online?

• Variety Stores (35.4%)
• Fashion (26.5%)
• Homewares & Appliances (11.1%)
• Health & Beauty (7.3%)
• Hobbies & Recreational Goods (7.1%)
• Media (6.9%)
• Specialty Food & Liquor (5.7%)

But was is more interesting are the growth numbers for these categories:

• Variety Stores (28.5%)
• Fashion (27.2%)
• Homewares & Appliances (10.9%)
• Health & Beauty (13.2%)
• Hobbies & Recreational Goods (9.9%)
• Media (8.1%)
• Specialty Food & Liquor (Flat)

The variety store category is lead by two product categories, which are electronics and fashion. Those two categories alone accounted for more than 45 percent of goods sold at general merchandise department stores.

This store category also includes marketplaces and discount stores, so it is not just major retailers.

Fashion leads the way among all product categories with 35.6 percent share of all purchases.

While both men’s and women’s fashion is growing rapidly, women’s fashion leads the way with 43.8 percent of growth and men’s fashion comes in at a 26 percent growth rate.

November – Biggest for Fashion

Sales events in November have brought that month to the top of the list of most active months in eCommerce for fashion items.

And it is sales events such as Black Friday, Cyber Monday, Click Frenzy, and Singles Day that are driving the revenues to online retailers.

For the first time ever, fashion retailers had the biggest month of the year, outstripping December thanks to a huge 30.2 percent year-over-year growth rate.

The report didn’t discuss other product categories in the same detail. But presumably, they are all doing better in November now as those sales events typically raise online shopping around the globe.

READ MORE: Australian Retail Appears to Have Had a Good Christmas

Buy Now – Pay Later

Buy Now, Pay Later (BNPL), is also becoming more popular with Australian consumers.

The report estimates that BNPL payments accounted for 7.7 percent of total online goods spend. The service appeals to the 18-39 year old demographic and has been especially popular for fashion purchases.

Australia Post’s report suggests the rise in BNPL will catch on in other online retail categories and spread quickly to a wider demographic.

Marketplaces Here to Stay

Buying on Marketplaces is booming growing by 74.8 percent in 2017 alone. Once the sole domain of eBay, Etsy, and Redbubble, other players have since joined the party.

Retailers such as Catch and Myer have recently opened marketplaces, recognizing the benefit of increased customer traffic and expansion into other categories.

And one cannot forget about Amazon’s entry as the company expands its operations from one warehouse in the Melbourne area to more locations around the country.

READ MORE: Fill Your Cart With Colour eBay Campaigns Come to UK and Australia

Marketplaces are eBay’s Domain – But For How Long?

eBay has been the leading global marketplace in Australia for many years. It has faced little competition until last year’s entry of Amazon.

But as Australia Post’s report points out, other Australian retailers are also expanding into the space, bringing more pressure on eBay to defend its position.

Probably because of the leading position eBay has in Australia, they are also resorting to a policy unique to the Australian market.

As we had reported earlier in the year, eBay in Australia posted a seller policy that banned the use of fulfillment operations that are also retailers.

In an article posted yesterday by The New Daily, eBay defended the policy:

“Our fulfillment policy was revised earlier this year to limit confusion among Australian buyers as to whom they purchased their items from, where their data has gone, and who to contact should they require customer service or seek to make a return.”

“The policy does not ban the use of third-party fulfillment on ebay.com.au but restricts the use of third-party fulfillment undertaken by retailers or marketplace operators for purchases made on ebay.com.au only. This policy only applies to Australia.”

eBay Spokeswoman quoted by The New Daily

READ MORE: eBay Australia Bans Amazon FBA Shipments

Online Growth with Amazon

Australia is a hot eCommerce market despite slowing economic growth in 2017.

A combination of convenience and looking for a better deal is making more Australians look at online retailers for goods and services.

As mentioned earlier, Amazon was basically a non-factor in this report but that will change for 2018 and Ebay will feel the pressure as it has been a go-to online shopping destination for many years.

As Amazon expands its operations and at some point offers Prime membership in Australia, it will drive more sales to its business.

READ MORE: Amazon FBA Open For Business in Australia

Australian retailers are not standing still, but just like in the U.S. and in Europe, large retailers with physical stores have a tough time making adjustments at the speed of eCommerce growth.

Amazon may take some business from eBay, but Amazon will likely take more business from traditional retailers in the high population centers such as Melbourne and Sydney as it starts to offer one or two-day delivery when Prime is released.

With so much growth and Amazon now in the market, there is an opportunity for small business merchants to ride on the coattails of both.

To comment on this story, please head over to our Facebook Discussion Group or use the comments section below.

Connect with us: Head over to our Facebook Group for Small Business Sellers and interact with other small business owners.

Follow us on Facebook, Twitter, or LinkedIn to stay up to date with relevant news and business insights for your online business.