Insights on the Australian ecommerce market

Australians shop cross-border more frequently than most countries, and at Retail (R)Evolution, three experts shed light on the country’s growing ecommerce market.

Wed May 16 11:19:00 EDT 2018
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Australians shop cross-border more frequently than most countries, and on Day 2 at Retail (R)Evolution, three experts participated in a panel to shed light on the country’s growing ecommerce market.

Moderator Paul Greenberg of the National Online Retailers Association brought a burst of energy, channeling Oprah and Dr. Phil, along with his 25-plus years of experience in the Aussie retail industry. He was joined by Shane Lenton, CIO of Cue Clothing, the largest local manufacturer of fashion in Australia, and Seamus Byrne of Brandbank, which has hundreds of stores and operates licenses for French Connection and Nine West, and also retailers expanding into Australia such as Zara.

The panelists explained that around a decade ago, Australian shoppers had a cross-border revolution of sorts and sought more products than they could get domestically. In the time since, Australian shoppers have shown they are willing to shop across borders if they are comfortable with the terms around delivery and returns.

Aussie shopper expectations are similar to those of shoppers in the U.S., with consumers demanding:

  • Fast shipping
  • Notably, Aussie shoppers have shown they will pay a “fair” price for shipping
  • The return process is seamless
  • The experience as if they were buying domestically

Of note, Amazon has only been live in Australia for about seven months and Prime membership is not available yet, so Aussie customers have not developed an expectation around free shipping quite yet.

Online marketplaces are Growing

Amazon’s entry into the market seems to be progressing slowly, and the panelists speculated that the company may be working on establishing an effective distribution model for a country that is large geographically but that has a relatively small population.

Even so, marketplaces are exploding in Australia. The local attitude seems to be “let’s not wait for Amazon, let’s get our own marketplaces going.” eBay has had the market to itself for years, but other local options include Iconic, a marketplace that specializes in fashion, clothing and footwear.

Payment alternatives are important

Lenton estimated that over 30 percent of online transactions in the country are through the “buy now, pay later” model, which is now starting to pick up steam for in-store retail, too. These types of purchases tend to lead to higher average order values as well, Lenton said.

The panelists speculate that Millennial shoppers are driving this trend, possibly because they find credit card purchases to be either risky or out of fashion. PayPal is also important to these buyers.

Lenton also described Cue’s unexpected runaway success implementing Alipay and Wechat in its stores; these payment options were especially popular among Chinese tourists.

Priorities for Australian cross-border retail

Ultimately, merchants that want to get started selling into Australia need to focus on creating a frictionless process. Byrne advised spending extra time perfecting your customer service and returns processes. Retailers should also be aware of recent policy changes that will require Australia shoppers to pay a tax on all online overseas purchases; the law previously only applied on purchases greater than $1,000 in value. Brands that once subsidized shipping costs in an attempt to attract cross-border shoppers likely won’t be able to cover the new tax as well, so it’s a development worth watching if you’re targeting the Australian market.

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