E-Commerce in Australia: Outlook & Retail Trends in 2023

Last Updated: October 30, 2023


How's The Development of E-Commerce in Australia?

The Australian online shopping sector experienced significant growth over the past few years, mainly due to the coronavirus pandemic. Australia Post reports that 82% of adults shopped online in 2022, up from 78% in 2019, while online retail spending reached 18.1% of the total (Our figure may differ due to methods of calculation), amounting to AUD $63.8 billion—an 1.7% increase from 2021.

Internet usage expanded to 89.6% of the population in 2020, up from 83.5% in 2013, according to the International Telecommunication Union. The fixed broadband internet subscription penetration rate also grew, reaching 35.7% in 2020, up from 25.7% in 2013.

Although e-commerce in Australia was slow to gain traction initially, it is still highly developed and rapidly expanding. Major brick-and-mortar retail groups have established online arms, and the number of pure internet retailers continues to grow. Business-to-business and business-to-consumer transactions are increasingly popular, with e-banking embraced by the country’s major financial institutions.

Regarding sector distribution and growth, Australia Post’s 2023 e-Commerce Industry Report revealed that home & garden sector accounts for the largest share of sales with AUD $18.7 billion or about 29.3%. However, food & liquor and variety stores have seen the most growth.

Local companies such as Woolworths hold the largest share of the online market, with other domestic players like Myers, Coles, and Kogan also maintaining a strong presence. Traditional retailers are expected to continue investing heavily in digital transformation and warehouse automation. Myers, for example, has established a national distribution center in Melbourne capable of handling up to AUD $1 billion in online sales. The online grocery market is predicted to be highly competitive for business investment.

Online & Offline Retail in Australia
Unit: Billion USD
Online & Offline Retail Growth in Australia
Unit: %
Retail Value Added (% of GDP) in Australia
Unit: %
E-Commerce Sales a a % of Retail in Australia
Unit: %

Competition Among E-Commerce Platforms in Australia

The 2021 Digital Life Index, published by Publicis Sapient, revealed that Australians were initially slow to embrace e-commerce, but lockdowns have accelerated consumer spending on online marketplaces. Forecasts suggest that online sales will make up over 10% of total retail sales in 2026, up from 6% in 2019. Australians have been especially active in cross-border online shopping. As more people engage and spend online, we anticipate an influx of brands entering the country and establishing a local presence.

Online marketplace operators like eBay, Amazon, and Gumtree have benefited from the shift to online channels. However, growth has not been evenly distributed. Amazon, in particular, has outperformed eBay and Gumtree, which have experienced a decline in interest and traffic over the past five years relative to their previous performance. Amazon’s rapid expansion in Australia includes opening numerous distribution centers, which enables next-day delivery to customers in Sydney and Melbourne. Amazon Prime, which offers free delivery for an annual fee, also contributes to the company’s success.

Retail & E-Commerce Trends in Australia

Buy now, pay later (BNPL) has gained traction as a popular e-commerce payment method in Australia, where debit cards are the most common form of payment, accounting for 52% of transactions and $17.2 billion in sales. While cash remains a significant payment choice for some demographics, capped interchange fees on debit and credit cards may encourage further card usage. Australians widely recognize and use Visa, Mastercard, and American Express, with mobile shoppers increasingly adopting PayPal for digital wallet transactions. Bank transfers hold a 13% share in total payments, with younger consumers driving the adoption of BNPL methods offered by intermediaries like Afterpay, which allows customers to purchase items and repay the cost in interest-free installments. This payment trend has spurred event-based shopping, such as Afterpay Day, which generates significant sales for participating e-commerce merchants. The New Payments Platform (NPP) and open banking initiatives are expected to further shape the payments sector by enabling faster transactions and data sharing, potentially leading to innovative financial products for consumers.

COVID-19 has created and accelerated new consumer purchasing behaviors, such as increased online retail sales, which are expected to persist even after the pandemic subsides. In 2022 and beyond, we anticipate that consumers will continue to make fewer shopping trips but have larger baskets, boosting the average basket size across retail sub-sectors by 8-15% (BCG estimates), particularly in the grocery sector. Growth of e-commerce is likely to continue as more first-time digital buyers enter the market and existing customers expand their online purchases. Additionally, the pandemic has heightened consumer focus on health and wellness, with over 20% of Australians looking to increase spending on products and services aimed at enhancing their wellbeing, using accumulated savings.

Financial Environment

Source: World Bank, Payment Providers, eMarketer

In Australia, There are about 59.7% of people use credit cards, and 90% of people use debit cards. While there are 67.7% of people purchase on the internet, there is only 67.7% of people with online banking accounts.

% of People With Financial Accounts
Unit: %
% of People with Credit Cards
Unit: %
% of People with Debit Cards
Unit: %
% of People Exchange Through Digital Channels
Unit: %
% of People Buy Through Online Channels
Unit: %
% of People with Internet Banking Accounts
Unit: %
% of People Pay Utility Bill Online
Unit: %
E-Commerce Sales as a % of Total Retail
Unit: %

Weekly Use of E-Commerce

Source: Statista Digital Market Outlook

E-Commerce Driving Factors

Source: GWI.com (Q3, 2021)

For E-Commerce Customers in AustraliaWhat are the major driving factors to purchasing online?

% of respondents think is their main drivers
Source: Multi-select survey

Consumer Goods E-Commerce in Australia

Source: GWI.com (Q3, 2021)

There is 19.45 million consumer goods e-commerce users in Australia, and they spend total of around 38.26 billion USD dollars in 2021. That makes a per capita spending on consumer goods e-commerce of around  1968 USD. Also, in those e-commerce users, about 42.5% of them purchase through their mobile phone.

Market Size of Consumer Goods E-Commerce
Unit: Million USD

Digital Media E-Commerce in Australia

Source: Digital Market Outlook 2021
Market Size of Digital Media E-Commerce
Unit: Million USD
  • Retail Sales & E-Commerce Penetration: eMarketer, Edge By Ascential, Euromonitor Retail Passport
  • Currency: Based on IMF Data 2022/12
  • Consumer Behavior: Statista Digital Market Outlook
  • Retail Channels: Euromonitor, Local Association, Financial Reports (Of Relevant Retailers)
  • Data Compilation: OOSGA.org
  • Analysis: OOSGA CR Team Analytics
Author: CR Team

Our consumer research practice tracks what customers spend and how they make decisions across major economies in the world.

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