E-commerce Activity Rising Among Australian Businesses

E-commerce Activity Rising Among Australian Businesses

Australia is the 4th largest regional e-commerce market globally, with online sales of US$ 18.6 billion in 2018. The future e-commerce projections are also on a positive trajectory, expecting to reach US$26.9 billion by 2023. With the future looking bright, E-commerce in Australian businesses is becoming more important. Local businesses are seeking to hop on the e-commerce wave and access the growing number of consumers migrating to digital markets. 

Australia is a low-risk country with a stable economy that ranked 5th at the Economic Freedom Index, demonstrating judicial effectiveness, fiscal health, and business and trade freedom. 

Outlined below is a comprehensive demonstration of how e-commerce is reshaping Australian businesses and broadening their market share. 

E-commerce in Australian businesses has allowed companies to gain global customers

E-commerce in Australia one of the biggest globally
Small businesses that moved to a more optimized digital engagement have seen a  60% increase in revenue per employee.

A study found that businesses that have higher than a basic-level presence over the internet reap more benefits. According to a recent report performed in Australia, small businesses that moved to a more optimized digital engagement have seen a  60% increase in revenue per employee. Furthermore, they have reported a 38% growth in revenue. This goes to show that the potential of implementing an e-commerce strategy for small-to-medium-size businesses in Australia results in a considerably positive trajectory.

Currently, there are a number of major projects seeking to implement e-commerce into their business strategies in Australia. Perth Airport has initiated a project regarding their Duty-Free shopping business model in which they are developing a system that provides payment methods that are local for Chinese travelers. The airport will soon have a system that accepts Chinese payment providers, such as Alipay and WeChat. Given that Chinese travelers have easier access to their China-based payment methods, issues with financial transactions will be greatly reduced and user satisfaction will increase.

Another business that is optimizing their e-commerce presence is Lobster Shack. Similar to Perth Airport, this restaurant company is working on its system to accept payments through the Chinese gateways. Not only are they working to implement AliPay and WeChat, but they are customizing their promotion channels to fit the language of their Chinese customers as well, which is important as it is well-known that breaking the language barrier is key to connect with customers.

Statistics and trends in E-commerce in Australia 

There is a reason why Australia is considered within the top ten of e-commerce markets. Australia ranked 4th in generated e-commerce sales, only behind North America, Asia, and Europe. Furthermore, Shopify’s data on global e-commerce states that Australia’s rate of e-commerce growth will reach 43.6% by 2023. 

E-commerce revenue is on the rise. Australia is set to accumulate US$20.6 billion in e-commerce revenue throughout 2019, with a compound annual growth rate of 7% until 2023, contributing to a market volume of around US$27.1 billion. During 2019, average revenue per user (ARPU) is expected to reach US$1,156 per person. 

E-commerce in Australian businesses, strong local demand
E-commerce in Australian businesses: Australia is set to accumulate US$20.6 billion in e-commerce revenue throughout 2019.

The most considerable players in e-retail are fashion, electronics and media, toys, furniture, and personal care products. The most notable trend within these sectors is that of fashion which has accumulated the highest revenue, almost doubling other industries with a projected US$6.9 billion in 2019. 

A key point to highlight in the Australian e-market is the strong local demand and user market size. In 2019, 90% of e-commerce purchases were domestic, with over 90% of payments processed using cards. This data not only evidences the high usage of digital payment methods but it shows the strong domestic demand in Australia. On top of that, the number of users is expected to grow from 17m to 20.4m by 2023, which is 83% of the total Australian population. 

A growing market potential, strong local demand, and profitable results are the most significant characteristics of e-commerce in Australia. Entrepreneurs seeking to incorporate their business in Australia are advised to investigate legislation, compliance and market trends. 

E-commerce in Australian businesses: Opportunities for innovative businesses

There are a variety of opportunities to innovate in the e-commerce business. According to one of the World’s leading web domain providers, 59% of small businesses in Australia don’t have a website. According to the report, small businesses are under the misconception that implementing a website is a difficult and expensive task. As a consequence, they are unable to reap the benefits available by simply putting together a digital strategy. 

E-commerce in Australian businesses, standalone stores have seen the impact of online shopping
According to one of the World’s leading web domain providers, 59% of small businesses in Australia don’t have a website.

The report expands on the reasons, explaining some owners tend to think that implementing a website is unresourceful and inefficient and that their business is too small for it to make a difference. In contrast, the percentage of businesses that did implement a website declared that it contributed up to 25% of their growth. An innovative solution to this misconception is bringing web hosting services to small-business’ needs. There are a number of businesses offering web services with positive results, however, small businesses still need some guidance to break into digital strategies.

Another area in which there is room for development is shipping. Due to the sheer expanse of Australia, shipping costs are fairly high as well as average delivery times being up to 8 days in the suburbs. To compound this, greater numbers of customers are reporting delays or errors with their deliveries. As a result, it is common for consumers in Australia to buy their products online and later pick them up personally at the standalone store. A logistic innovation is necessary to complete the e-commerce process by delivering to the consumer doorstep, reducing delays, costs, and errors. Innovation in logistics is developing around the world including drone delivery, big data that helps in performance management and delivery calculation, and augmented reality used in warehousing operations.

How is e-commerce reshaping retail in Australia?

Due to current disruptions introduced by technology, a percentage of high street stores have suffered losses. Although it’s been reported that high street stores will continue to be used as in-person shopping is increasingly considered an experience or a journey. However, it is undeniable that these individual stores still need a digital presence to create awareness. Recently, it has been reported that standalone stores are struggling to increase customer loyalty. Digitalization is reshaping the retail industry and a clearer competitive distinction between stand-alone stores and e-commerce platforms is set to be developed.

Let Biz Latin Hub help you access the Australian E-commence market

E-commerce in Australia is booming; local demand for goods is strong and on an increasing scale. Either by digitizing your business, offering digital assistance services or by innovating the sector’s issues with shipping, ride the e-commerce wave to increased profits and a broader customer base. To simplify market entry into this new country, seek assistance from experts that will make sure your business is compliant.

At Biz Latin Hub, we have vast experience helping businesses incorporate into the South Pacific region as well as Latin America. Our teams of local legal experts are ready to assist you with due diligence, legal services, visa processing and more. Contact us today and get started. 

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The information provided here within should not be construed as formal guidance or advice. Please consult a professional for your specific situation. Information provided is for informative purposes only and may not capture all pertinent laws, standards, and best practices. The regulatory landscape is continually evolving; information mentioned may be outdated and/or could undergo changes. The interpretations presented are not official. Some sections are based on the interpretations or views of relevant authorities, but we cannot ensure that these perspectives will be supported in all professional settings.
Legal Team Australia

Legal Team Australia

Legal Team Australia is the Biz Latin Hub leading experts on doing business in Australia The Team writes on the news, doing business, law, and changing regulations. The team are experts in corporate law, Administrative law, Employment law, Immigration law and legal advisory services. Read more about them here. You can contact Legal Team Australia via our "contact us page".

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