A quick analysis of opportunities for international retailers expanding into the Australian eCommerce Market
Economy in the Australian Market
Australia is home to 23 million people, spread across 7.7 million square kilometres. A largely multicultural society with 90% of the population residing in the continent’s sprawling cities. Sydney, Melbourne and Brisbane are the three largest cities. GDP per capita ranks Australia as the 12th richest country in the world according to the World Bank.
Australia is known for its high standard of living and in 2012 was ranked second on the Human Development Index. Life expectancy is one of the highest worldwide at 81.9 years, an important point to consider when converting online customers, repeat customers who engage regularly in cross border online shopping, and have a lengthy projected life span are a worthwhile investment for retailers in the Australian eCommerce Market.
Australian ECommerce Digital Buyer Penetration
The Australian eCommerce market is forecast to be worth USD 12.8 billion in 2016, and is expected to increase to USD 18.7 billion by 2020, at projected growth rate of 9.87% per year.
Digital Shopper Penetration is currently at 62.58%, and expected to reach 69% by 2020. The average revenue per user is USD 1,067.
Segmenting users into age and gender aligns Australia with what would be considered fairly common target groups for digital retailers. Young users are more likely to use eCommerce , bypassing the older generations significantly. Females in the 25-34 year old age group have the highest market share at 2.1 million USD, however this takes an interesting turn in the 35-44 year old age group, where there are more men using eCommerce than their female counterparts.
Clothes and shoes account for the largest market spend, with USD 3.9 billion forecast for 2016. This figure is closely followed by sales for personal electronics. Both figures are expected to grow their market share considerably by 2020.
Where do Australians Shop from?
Australia is known for its affinity for cross border trade. A brief look at the countries Australia imports from gives an idea of the demand for foreign goods. China, USA, Japan and Germany are all key import partners for Australia. China accounts for A$52 million of Australian imports.
Payment Methods Preferred by Australian Online Shoppers
Credit Cards account for the majority of cross border sales in Australia, with Visa, MasterCard and Amex making up the bulk of transactions. Debit cards and e-wallets take second place, with many Australians using eWallets like Paypal as their preferred payment method.
Online retailers may want to consider offering POLi, a popular real-time bank transfer service in Australia. In some cases, Cash on Delivery is preferred (almost 5%), retailers should consider the cost/benefits of offering it in a market where credit is the go-to preferred payment method.
Logistics and Infrastructure in Australia
For such a vast country, Australia boasts a surprisingly world class logistics and infrastructure system. Its LPI score is ranked 19th in the world by the World Bank. Situated a great distance from its international markets, Australia has built a major multimodal transport system (across water, land and air) to facilitate international trade.
There are 25 major ports in Australia linked by road, air, rail, and coastal shipping. This set up makes it easy to access the market with cross border goods.
Device Usage in the Australian Market
mCommerce and smartphone usage continue to grow in Australia on a year on year basis. Mobile penetration was at 84.5% in 2015, and is expected to reach 88.6% by 2019. Many Australians access the internet through a variety of devices, with laptops and desktops accounting for over 70% of overall user penetration.
Marketing to Australians
34% of advertising spend in Australia is used for Digital marketing, with a further 30% investing in free-to-air TV. Newspapers are also a popular advertising medium accounting for 13% of annual advertising spend in 2014.
Another key metric for marketing in Australia is understanding which social networks are popular. 71% of Australians engage with Facebook, with 53% logging in on a daily basis, Google, LinkedIn and Twitter have approximately 30% user penetration each.
For more market insights, check out the eShopWorld series of blogs covering a range of emerging eCommerce markets.
*Insights derived from eShopWorld data, Statista, WorldBank, OECD and other industry sources.