Online retail sales soar to $15.25 billion as older shoppers lead the way

Australian online retail spending increased by 6.4% for the year to April 2014, amounting to $15.25 billion in sales and 6.6% of traditional retail spending, according to the National Australia Bank Online Retail Sales Index published last week. 

Victoria saw the strongest growth in online retail sales with a 0.9% increase, making the state the second highest spender with a 23.4% share of sales, sitting behind New South Wales at 33.1%.

Department and variety stores contributed 33.2% to growth, followed by online groceries and liquor sales at 22%, and online books, movies and music also at 22%.

Domestic online retailers were the big winners according to the report, growing by 1.6%, while international sales saw slower growth at 0.3%.

Stephen Kulmar, founder of retail consultancy Retail Oasis, told SmartCompany the growth in domestic online sales is linked to the high Australian dollar.

“When you’ve got [the US] dollar in decline, all of a sudden there’s an advantage to buy at home… When the Australian dollar hit parity, we just started shopping offshore,” he says.

Despite Australian retailers being latecomers to online retail, Kulmar says recent efforts to push online sales may also be a factor.

“Domestic retailers have finally invested in their online sites and are trying to convince us to come back,” he says.

Partner at Lowe Lippmann Chartered Accountants and Business Advisors, David Gordon, says domestic online retailers have become more online-savvy in recent times.

“Australian online retailers are getting a lot smarter in terms of their marketing and their search optimisation,” he says.

“What they have been successful in doing is driving traffic to their site, and then once the traffic had visited their site, they were then more successful in converting that traffic into sales.”

The report says people in the over 65 age category are the fastest growing group of online shoppers, rising by 0.6%.

“I think you’ve got to look at the base that the growth was off,” says Gordon.

“I think it’s just indicative of that group getting more involved in the channels… It just emphasises that online retailing is becoming very much a part of life, and still it only accounts for just over 5% of all retail, and that’s domestic and international,” he says.

Chief executive of the Retail Doctor Group, Brian Walker, says Australian online shoppers prefer local goods when affordable, which could account for the growth in domestic purchases.

“There is a preference for consumers to buy Australian based, but there is a small propensity for elasticity – if the price is significantly different, they won’t,” he says.

“A sense of security is important. If they need to return goods it is a more secure feeling – they can pick up the phone domestically.”