Australia eCommerce Market & Startups Summary
Australia is a market with unique features and big growth opportunities for both big retail brands and ecommerce startups.
• Australia’s e-commerce market has innovated at a slower pace than other highly developed nations, but it is nevertheless growing, and is marked by distinctive characteristics as a result of its geography.
• Australia and China share a daigou (‘buy on behalf of’) culture, whereby shoppers in Australia buy and ship Australian and international products into China. Daigou started primarily as a means to ship baby formula into China and has since spread into other market segments such as beauty products, medicines and luxury goods. The global pandemic created supply and import issues for daigou shopping, but it is still a key feature of Australian e-commerce.
• E-commerce is strongly integrated into daily life; 72 percent of the nation shops online, with consumers spending an average of $2,287 a year. Australians tend to spend about twice as much when they shop online versus in a physical store, as e-commerce facilitates buying bigger and bulkier items.
Local brands dominate in a growing e-commerce market in Australia
Australia’s US$42 billion business to consumere-commerce market grew 14.3 percent in 2020; this growth is projected to continue at a compound annual growth rate (CAGR) of 13.8 percent to 2024. E-commerce already makes up 16.3 percent of total
retail in the country, and unlike many countries in our report, sales are dominated by a pair of local brands. Australian supermarket chain Woolworths is the top online retailer by net sales, followed by fellow domestic supermarket chain Coles. In third place is Apple. Migrating to an omnichannel strategy can pay dividends for merchants. Australians are not particularly loyal to major domestic brands and ecommerce startups – in any given quarter, nine out of 10 Australians will shop at both Coles and Woolworths – but research suggests that once consumers are using the online infrastructure of one brand, they are four times less likely to shop with other similar merchants.
Mobile commerce is less popular than desktop, but younger Australian
generations are driving uptake
The $15.2 billion (AUS) Australian mobile commerce market now accounts for over a third (36 percent) of total e-commerce. In 2020, mobile commerce usage dropped, as many office workers began working from home and shopping via their desktop computers. However, as normal working patterns resume, mobile commerce growth is set to pick back up at a strong compound annual growth rate of 17.6 percent to 2024. When using mobile commerce, traditional browsers are still preferred over apps, with browser-based shopping used in 62 percent of completed mobile transactions. Mastering mobile commerce is essential to reach younger generations. Just under half of Australians (49 percent) shop on their mobiles at least once a week – a figure that rises to 66 percent for Millennials and 65 percent for Gen Z.
Australia’s US $42 billion business to consumer e-commerce market
grew 14.3 percent in 2020.
Cards are used for half of all Australian online payments
Card is the most used way to pay online in Australia, taking 50 percent of transactions. Digital wallets are the next-most important method, used in 23 percent of payments, with bank transfers coming in third, with a 16 percent market share. By 2024, cards are expected to account for 52 percent of payments, while digital wallets will take 21 percent and bank transfers 20 percent. Buy now, pay later fintech startup such as Afterpay and Klarna are also on the rise in Australia, with 30 percent of the adult population now holding an open buy now, pay later account. With strong uptake among teens and younger people as a means to spread out online shopping payments, there are growing calls for the Australian buy now, pay later industry to be regulated to the same standards as other payment methods such as cards.
Mobile, cross-border and buy now, pay later are
on the rise as consumers show a willingness to
adopt new shopping and payment methods.
Australians are regular crossborder online shoppers, ascouriers work to meet demand
The majority of Australian online consumers – 61 percent – have shopped cross-border,20 making for a $4.2 billion market,21 which takes 10 percent of total e-commerce in the country.22 The most popular overseas shopping destinations are China (first), the U.S. (second) and the UK (third). At present, Australian shoppers find 10 days to be an acceptable delivery speed for a cross-border purchase from the U.S. International logistics providers are investing in additional capacity to meet increasing Australian
cross-border e-commerce demand. DHL, for example, launched a new Australia-Singapore freight service in 2021 to ramp up e-commerce capacity and delivery speeds across its south-west Pacific network.
Social media giants have begun to focus ‘down under’.
Australians spend almost two hours a day on social media, making for a huge opportunity for brands to court customers. The merging of social media with commerce is a global trend that is taking root in Australia. Some 30 percent of internet users aged 16 to 64 already use social media platforms for work, and key social media sites are optimizing in Australia for shopping. Facebook and Instagram’s shop functions launched in the country in 2020, while Pinterest is due to roll out shopping functionality in
Australia in late 2021.
Source: JP Morgan Report