Australia: An affluent and empowered e-conomy
By Georges Berzgal, VP & Managing Director, Global Ecommerce, EMEA, Pitney Bowes
Are you a British retailer interested in selling cross-border to Australia?
Here is our expert ecommerce advice.
Despite having a population of 24.7 million people, which is much smaller than many of its APAC counterparts, Australia has become one of the top ten ecommerce markets in the world. Primarily, this is because it is an affluent country with a booming economy. Its GDP per capita is around $88,000, meaning people have more purchasing power and disposable income for retail goods. It should be no surprise, then, that the country’s online sales are forecasted to exceed $24 billion by 2018.
Research findings from Pitney Bowes’ 2017 Global Ecommerce report reveals that Australia is one of the countries seeing the highest growth in consumers shopping online more frequently, a 10% increase from 2016. 79% of respondents in a separate survey say they actually prefer online to traditional shopping. Furthermore, Australia’s ecommerce is heavily mobilised. By the end of last year, 35% of eCommerce transactions were completed on mobile devices, with social media offering a quick and convenient way of engaging a variety of age groups with promotional material while ‘on the go’. In 2017, for example, social content in the region is predicted to have reached 12.1 million people.
From a retailer perspective, widespread consumer access to these connected devices means they can easily target and entice the breadth of the country’s potential buyers. 89% of the population live in big urban centres, which means building brand awareness and marketing can be concentrated to a handful of areas. Many Australian retailers with physical stores have capitalised on their brand recognition and have migrated much of their offering to online to lower their overheads, and the opportunity is for strong for UK retailers to do the same. This consumer behaviour demonstrates an appetite for online offerings from known brands. Australian consumers might experience such brands while on holiday in the UK or via online media. Australians who have lived in the UK and moved back, or British expats living in Australia are likely to gravitate to these brands.
In terms of payment methods for ecommerce transactions, in Pitney Bowes’ 2017 consumer survey, 64% of shoppers questioned in Australia prefer eWallet such as PayPal as a method of payment when shopping online cross-border, compared to just 23% preferring credit cards. Of the 12 countries surveyed, Australians showed the highest preference for using eWallet, way above the global average of 41%. Therefore, ecommerce retailers must ensure that they aren’t relying on third-party platforms for payment, as direct card payments are the preferred method of transaction for most consumers.
Compared to many developing countries, Australian online retailers face fewer bureaucratic hurdles and barriers to entry. This makes it a very appealing proposition for foreign ecommerce investment. Ecommerce in Australia is in fact balanced in favour of cross-border traders, as local retailers are charged high wholesale prices for operating in the region. There is also a loophole exempting foreign websites from charging a 10% general sales tax (GST) on consumer purchases under AUS $1,000. This is a big advantage for Australian consumers who are interested in international brands, and helps inspire the growing number of cross-border transactions, compared with domestic ones.
The good news for British retailers doesn’t stop there. Recent ecommerce consumer research and found that slightly under half (47%) of Australian online shoppers favour UK retailers when seeking an international brand. As with many areas in business, the human element cannot be discounted when we look at the retail relationship between the two countries. Britain and Australia have many cultural traits that unify them, like the commonwealth bond built on a shared monarchy, and many sporting rivalries that span decades of highs and lows. These cultural similarities translate through to the perceptions many Australians have when considering international retail brands, hence the warmth towards and awareness of UK retailers and brands.
As a result, the cross-border online retailing opportunity in the region do not show any signs of slowing. By 2018, 8.4 million Australian shoppers are expected to make a cross-border purchase, collectively spending around $14.9bn, with apparel and footwear likely to be the biggest categories. Ultimately, Australian shoppers are in the fortunate position of having the disposable income and the access to technology to demand whichever products they desire, within reason. If domestic laws put Australian retailers at a disadvantage in the booming ecommerce sphere, it seems consumers are happy to purchase goods elsewhere, particularly from the UK.
The market is wide open for British companies to trade in the region, but they must be mindful that having a trusted partner to facilitate heavy demand at a cost-effective price point for the end consumer is key. Pitney Bowes gives British retailers the tools to excel in the modern retail environment, which allows them to focus on selling their products in Australia, or wherever else they choose worldwide.
Download the Pitney Bowes 2017 Global Ecommerce report - "Evolution at home, Revolution abroad" - the first report to comprehensively analyse the global ecommerce landscape from both the retailer and consumer perspectives.
Learn about Complete™ Cross-Border from Pitney Bowes, the scalable end-to-end global ecommerce solution that can handle all facets of enterprise retail cross-border expansion.