The 2023 Online Shopping Report for Australia

2023 Australian Online Shopping Report

BusinessDialogue learned that recently, Australia Post released the 2023 edition of the “Australia Online Shopping Report”, which analyzed the online shopping behavior of Australian consumers in the past year. The report shows that in 2022, after experiencing a significant increase during the epidemic, Australia’s e-commerce market has begun to stabilize and the number of consumers returning to offline shopping has increased.

Table of contents:

• Overview of Australia’s e-commerce market

• Major trends in Australian online shopping

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• “Bricks&Clicks” model is popular

• Participation in online shopping

• Regional growth of online shopping

• Characteristics of online shopping consumer groups

• Category trends overview

• Trends in Australian electronic products

• Food and groceries

• Fashion category

• Home and gardening

• Health and beauty

• Hobbies and entertainment products

Overview of Australia’s e-commerce market

In 2022, driven by strong family savings levels and wage growth, Australians’ desire to consume reached unprecedented heights, leading to an increase in employment. In 2022, Australian retail spending reached a record-breaking $353 billion, a year-on-year increase of 9.2%, most of which was caused by price inflation and customers returning to physical stores.

However, after skyrocketing during the epidemic, the online shopping penetration rate was weak for the first time in 2022 and returned to the growth trajectory before the epidemic. Nevertheless, Australian consumers’ willingness to shop online remains high, and household participation in online shopping has increased. In the past year, 9.4 million households in Australia participated in online shopping, accounting for 82% of all households, with an average of 5.6 million households shopping online each month.

A report shows that the amount of online shopping in rural and remote areas of Australia has increased by 6.4% and 5.7% respectively compared to the previous year. “Fanatical online shoppers” account for as much as 16%, and this group shops online every week.

In 2023, unfavorable economic factors such as rising interest rates, inflation, and increasing living costs will lead to a slowdown in consumer spending. As growth becomes more stable, building customer loyalty will be more important than ever.

For retailers, the rising cost of operations continues to affect profit margins, and supply chain disruption and labor shortages are also the most concerning issues for retailers. Faced with economic headwinds and external pressures, the demand for supply chain resilience has never been stronger than it is now.

Major trends in online shopping in Australia

In 2022, Australian retail spending reached a record high of $353 billion, an increase of 9.2% compared to the previous year. Online shopping spending was $63.8 billion, an increase of 1.7% compared to the previous year, and online shopping spending accounted for 18.1% of total retail spending. It is expected that price inflation will gradually weaken in 2023, leading to a slowdown in retail sales.

“Bricks&Clicks” model is popular

In 2022, the share of the “Bricks&Clicks” model in the Australian e-commerce market increased by 7.5% compared to 2019. This model refers to the business owning both physical retail stores (bricks) and operating online e-commerce platforms (clicks). At the same time, the market share of other pure online retailers decreased by 7% and the market platform share increased by 4% compared to 2019.

Online shopping participation

In 2022, 9.4 million Australian households shopped online, an increase of 1.6% compared to the previous year, with an average of 5.6 million households participating in online shopping every month. The peak period is in November, when 6 million households participate in online shopping.

As offline physical shopping resumes, online shopping frequency tends to stabilize. After achieving double-digit growth in 2021, the number of online purchases in Australia in 2022 decreased by 2.6% year-on-year. However, compared to 2020, the frequency of online shopping still increased, with nearly 60% of households making 12 or more online purchases last year, a 3% increase year-on-year. It is expected that the frequency of online shopping will continue to grow at a more normal rate in the future.

Regional Growth in Online Shopping

The report shows that in 2022, growth in rural and remote areas of Australia exceeded that of major cities, with growth rates of 6.4% and 5.7%, respectively. Although the number of online purchases nationwide has declined, some regions of Australia have shown strong momentum.

In 2022, Queensland had the highest year-on-year growth in online purchases, followed by another state with strong population growth, Western Australia. These states have pleasant climates, active outdoor activities, and therefore sports and leisure, pet supplies, gardening and tools, and automotive products are very popular in these states.

Overall, the e-commerce growth in states that were most affected by the pandemic lockdowns slowed the most, and some regions showed negative growth.

Segmentation of Online Shopping Consumer Groups

Occasional Online Shoppers

Approximately 2.8 million households in Australia are occasional online shoppers, with 1-4 active shopping months per year and an average of three retailers for online purchases. Occasional online shoppers are the largest online shopping group in Australia (30%), but they have the smallest online shopping volume (4%).

They are mostly male, aged 55-74 or above, and have lower incomes. Compared to online shopping, they prefer in-store shopping, value free shipping and cost-effectiveness, and are not interested in promotions and paid subscriptions. Their preferred categories include consumer electronics, home goods and appliances, gardening and tools, and health care.

Selective Online Shoppers

In Australia, there are approximately 2.4 million households that belong to the selective online shopper group. They have about 5-8 active shopping months per year and on average, purchase from 9 retailers online. This group makes up about 26% of the total number of online shoppers and their online spending accounts for approximately 14%.

Selective online shoppers are mostly men aged between 45-74 years old with medium income. They mostly live in urban areas in Australia and prefer to shop in-store. They tend to purchase auto parts, wine, and other alcoholic beverages online. They highly value free shipping and are driven to online shopping by factors such as price and unavailable items in physical stores. Promotions and subscriptions have less appeal to them.

Savvy Online Shoppers

In Australia, there are approximately 2.7 million households that belong to the savvy online shopper group. They have about 9-12 active shopping months per year and on average, purchase from 18 retailers online. This group makes up about 28% of the total number of online shoppers and their online spending accounts for approximately 32%.

Savvy online shoppers are mostly women aged between 25-54 years old, with families, busy lives, and medium to higher income. They mostly live in urban areas in Australia and value events such as Black Friday and subscription services that include free shipping. They prefer to purchase sports and leisure items, shoes, sports and entertainment goods, and pet supplies online.

Enthusiast Online Shoppers

In Australia, there are approximately 1.5 million households that belong to the enthusiast online shopper group. They have about 10-12 active shopping months per year and on average, purchase from 40 retailers online. This group makes up about 26% of the total number of online shoppers and their online spending accounts for approximately 14%.

The majority of passionate online shoppers are women between the ages of 18 and 44. They often have families, a relatively high income, and live in urban areas. They value the convenience of online shopping and prioritize delivery speed over free shipping. They have a stronger sense of sustainability than other consumer groups, and are attracted to promotions and paid subscriptions. They prefer to shop online for fashion, beauty products, and baby products.

Category trends

Overall, Australian consumers spent the most on online shopping for home and garden, but this category decreased by 3.5% compared to last year. Food and beverages showed strong growth, accounting for as much as 20.6%.

Australian e-commerce category trends

Groceries

In 2022, the sales of Australian groceries reached 11.6 billion US dollars, an 8.6% increase year on year. The main winners were retailers who had both online and offline business, namely retailers who adopted the “Bricks&Clicks” model, such as large and discount retail stores.

Driven by the closure of physical retail businesses in New South Wales and Victoria, transaction volumes in August reached record highs.

Boosted by Black Friday/Christmas, transaction volumes in November were strong.

In 2022, 7.5 million Australian households purchased groceries online, equivalent to 79% of the Australian online shopping population, of which 24% of the population accounted for 65% of the online shopping expenditure, with an average purchase frequency of more than 12 times. In addition, these consumers also accounted for approximately 51% of baby product expenditures.

Fashion categories

In 2022, due to the return to office work, the demand for fashion categories increased, with sales reaching 34.7 billion US dollars, a year-on-year increase of 25%, with online sales accounting for 32%, a year-on-year decrease of 0.9%. Female fashion categories had the highest purchase volume and became one of the strongest growing subcategories in 2022. The latter is also one of the categories that responded most strongly to promotional activities, leading sales in many large e-commerce shopping events.

Sustainability is a trend worth noting. In 2022, the sales of eco-friendly clothing saw an increase during promotional events like Green Friday. During the lockdown period, Victoria and New South Wales showed a strong demand for the fashion category, with November being a record-breaking month for fashion sales, with sales of sportswear, leisurewear, and footwear reaching $150 million.

In 2022, 6.2 million Australian households purchased fashion items online, with the top 25% of consumers accounting for 68% of online fashion spending. The average number of online fashion purchases was more than 12 times, and these consumers also accounted for 51% of online beauty product spending.

Home and Garden

In the past few years, online sales of home and garden products have maintained strong growth. In 2022, sales reached $72.3 billion, a year-on-year increase of 7.4%, with online sales accounting for 26%, a year-on-year decrease of 3.5%.

Unlike other categories, sales of home and garden products are often more stable throughout the year, although there are still peaks. The main reason for this is that home and garden retailers are more likely to adopt membership, loyalty, and subscription models, making them less affected by major promotional events.

Like home and garden products, demand for pet products increased sharply during the pandemic and continued to grow in 2022, with online sales increasing by more than 21% year-on-year, reaching a peak in August 2022 and again in November.

In 2022, 6.6 million Australian households purchased home and garden products online, accounting for almost 70% of the online shopping population in Australia. The top 26% of consumers accounted for approximately 63% of online spending, with an average of more than 6 purchases, and they also accounted for approximately 46% of game and toy purchases.

Health and Beauty

In 2022, the sales of health and beauty products in Australia reached 24.1 billion USD, a year-on-year increase of 13%. Online sales accounted for 12%, a decrease of 3.9% compared to the previous year. Hair and skin products, nutritional supplements, and other self-care products have become more popular. Like the fashion category, health and beauty products are one of the groups that reflect the strongest response to promotional activities.

There was a peak in demand for purchases in August of last year, and November was the second highest point of purchase.

In 2022, 4.8 million Australian households purchased health and beauty products, accounting for 51% of the online shopping population. The top 22% of consumers accounted for approximately 58% of online shopping expenditures, with an average of over 6 purchases. These consumers also accounted for 33% of sports and leisure online shopping expenditures.

Hobbies and Entertainment

Hobbies and entertainment products include auto parts, games, toys, and sports and outdoor products. In 2022, sales reached 4.3 billion USD, a decrease of 5.2% compared to the previous year. In that year, auto parts sales increased the most, possibly due to increased outdoor activities.

Sports and outdoor products were very popular in Black Friday sales, and demand for auto parts was strong in November sales activities.

In 2022, approximately 4.3 million Australian households purchased this category of products, accounting for 46% of Australia’s online shopping consumer population. The top 15% of consumers accounted for approximately 46% of online shopping expenditures, with an average of over 6 purchases. These consumers also accounted for 25% of online shopping expenditures.

Editor ✎   Ashley/AMZ123

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