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Offshore Online Shopping Surges
After slowing down markedly since 2012, Aussie online shoppers are spending big again with international stores. Current transactional data shows an alarming trend for local retailers.
Is the fightback over?
Since online shopping with overseas retailers peaked at 42 percent of all Australian online sales growth in May 2011, local retailers have steadily clawed back online market share from international businesses. A large part of the fightback can be attributed to natural economic forces – the value of the Australian dollar against international currencies has dropped around 30 percent since highs of $1.10 against the US dollar in 2011, increasing the costs of overseas goods considerably. The other part of the fightback has come from the significant growth in domestic e-commerce, as established brands weighed into the relatively underserved domestic online retail market. International online shopping growth slowed dramatically as Aussie consumers turned to domestic brands in increasing numbers.
A chart presented at the recent StarTrack Business Breakfast (see below) shows a dramatic resurgence for international online purchases in the last 12 months, despite two years of relative stability for the Australian dollar.
It’s a disturbing wake-up call for local retail brands, with the data from the NAB Online Retail Sales Index showing international purchases now accounting for approximately 33 cents of every Australian dollar spent online and rising, versus 29 cents in 2015. However, according to Ben Franzi, General Manager E-commerce and International, Australia Post, the growth of domestic retail remains strong and healthy overall. Part of that international resurgence, according to Franzi, is due to a nine percent rise since January in the value of the Australian dollar.
“International online shopping has enjoyed strong growth this year as the Australian dollar has risen against the US and British currencies, and global online shopping sales like Black Friday and Cyber Monday put the spotlight on international bargains,” he says. “At the same time, Australians have continued to buy more from local retailers, with domestic online shopping growth rising 15 per cent. As more local retailers participate in the global online sales, as well as Australia’s own Click Frenzy, we expect domestic online shopping to continue to enjoy strong growth.”
That spike in international sales during November 2016 begs the question as to whether Black Friday and Cyber Monday are good for Australian retailers, or whether those US-based events serve primarily to send Aussie consumers to international stores. Nonetheless, Australian retailers still account for the overwhelming majority of online spend.
“Overall, Australians buy mainly from local retailers, with domestic online shopping accounting for about 70 per cent of the total market,” says Franzi. “This has been the case for the past four years.”
No doubt the influential proponents of lowering the GST threshold on imports will be watching closely whether international online purchases continue to rise, putting that long-awaited tax back on the retail agenda and in the headlines again.