COVID-19 is proving to have some benefit for Australian businesses, according to new findings from an international research company. Ecommerce is now a bright spot in the Australian economy and a lifeline for consumers who are working and sheltering at home. Businesses that quickly transitioned to the new normal to survive are now debating if these are not short-term adjustments wondering how long this change will last and if further investments are essential for long-term e-commerce sustainability and growth.
All the signs point to a long-term change in consumer behaviour and the need to step up e-commerce functionality. Findings indicate that the e-commerce market in Australia has been on a steep growth curve during the past few years and has received an additional boost from the COVID-19. The pandemic is expected to ramp up e-commerce sales in the country at a compound annual growth rate (CAGR) of 10.3% between 2020 and 2024.
The initial counter pandemic measures disrupted Australia’s nearly three-decade recession-free streak, with the economy shrinking by 7% in Q2 2020. Retail was hard-hit as nonessential outlets had to close with no footfall. However, people rapidly rallied and transitioned to online platforms. While overall retail spending declined by 2.5% in April 2020, online goods spending came back. By Q2 of 2020, e-commerce average spend-per-visit was all higher than Q1 2020 or Q2 2019.
More than 200,000 Australians shopped online for the first time in April according to reports, including many older consumers who never felt the need to foray into e-commerce. Currently, 46% of Australian consumers are shopping online more often. The shift is most pronounced among younger people, with 62% of 18- to 25-year-olds and 57% of 26- to 35-year-olds buying online more frequently.
Analytics reveals that e-commerce payments in Australia are estimated to have grown by 13.9% in 2020 to A$52.2 billion (US$36.7 billion) riding on COVID-19 mitigation measures which kept wary consumers at home, relying on online platforms for almost all essential transactions. The report shows that the trend is likely to continue and, if so, then online commerce in the country is likely to top A$77.1 billion (US$54.2 billion) by 2024.
The Australian Bureau of Statistics showed that online sales in Australia registered a 55% rise in December 2020 compared to the same period last year. Additionally, more than 5.6 million Australian households did business digitally in December 2020 according to the Australia Posts Online Shopping Report published in January 2021. This reflects a 21.3% growth as compared to 2019 the average.
As Australian consumers continue to embrace online shopping, the use of electronic payments will increase as consumers move away from cash, GlobalData states. Payment solutions like e-wallets, portals and cards have also benefitted from this trend.
The research company’s 2020 Banking & Payments Survey conducted in Q1 2020 showed that payment cards were the top choice of payment for e-commerce purchases in Australia with a lion’s share of 52.3%. Other alternative payment solutions were responsible for 38.1%.
Experts say that the pandemic has altered consumer buying behaviour and are increasingly shifting from offline to online channels. The crisis opened the e-commerce market to a whole new set of consumers, who were not using online channels. While this may not be a choice, safety norms and rules have forced the closure of many physical stores; as such, shoppers have had to embrace e-channels for daily life.
“A significant rise in consumer preference for online channels during the pandemic coupled with the proliferation of online retailers and customised payment solutions will further drive e-commerce growth in Australia,” said the data company’s Banking and Payments Senior Analyst.
A senior executive at an international consultancy firm feels that the rapid shift to online may have “caught many retailers unprepared [but] has also seen businesses with strong digital DNA and e-commerce capabilities thrive, and their growth rapidly accelerate”.
