Press "Enter" to skip to content

Where’s the boom?

Media reports based on a recent Australia Post white paper on online retailing Inside Australia’s Online Shopping, have all run with the angle that online retailing is ‘booming’ – some kind of unstoppable juggernaut. 

So for instance, The Australian’s senior business editor Eli Greenblat wrote: ‘While the nation’s $300 billion retail sector faces dour trading conditions, driven by flat consumer sentiment and the slowest wage growth in 30 years, online sales are booming.’

Rates of growth in 2016 online sales tapered off compared to 2015, particularly in Homewares and Appliances, which covers photographic gear. In other parts of the report the online sales growth rate is quoted as 10.2 percent, not 11.5 percent. (Source: Australia Post)

Booming? Really? When one delves into the detail, online sales growth is actually tapering off, particularly in the Consumer Electronics subset of Homewares and Appliances, where the photographic equipment ‘sub-subset’ is counted. 

At least until the arrival of Amazon, the online shopping ‘boom’ seems to have boomed out. If Mr Greenblat had done more than rearrange the press release, he would have noted this in the actual report: ‘Although buying behaviour has remained positive across most categories, this year’s overall growth figures are more modest than in previous years. The online shopping sector has reached a level of maturity and is now widely considered an established channel.’

While small retailers have been hectored and lectured on the imperative to have sophisticated (ie, expensive) ‘omni-channel infrastructure’ – often via a clueless yet all-knowing media from businesses whose best interest is served by creating a sense of panic – it would seem that ordinary old (or Milennial!) in-store customers still count for something in the retailing game.

Overall, online sales grew 10.2 percent to $17.7 billion, while traditional retailing grew by only 3.3 percent. Impressive until we compare the gross sales figures: Bricks and mortar retailing brought in $261 billion in physical goods in 2016 compared to online retail’s meagre $18 billion. (Add another $4 billion for music and video streaming, and takeaway food services.)

The Department & Variety Store and Fashion segments together make up more than half of all online purchases, and and both recorded solid growth rates of 7 percent and 17 percent respectively. The Media category, in which Australia Post senior analyst Richard Lieu told PhotoCounter online print services resides, grew the most, at 23 percent. However, book sales alone represents four-fifths of Media sales. 

Growth in the Homewares and Appliances online retail segment was just under 7 percent, while the Consumer Electronics sub-category (including photographics) grew by just 3.8 percent in 2016. (Source: Australia Post)

Consumer Electronics which as we mentioned includes photographic equipment as a sub-set, only grew 3.8 percent. The entire Homewares and Appliances category (of which CE is a component), grew by a fairly modest 6.9 percent, with small appliances and homewares delivering most of the increase.

Moreover, the barbarians at the gate – the (still) GST-free online offshore retailers – are in relative retreat. Despite easy, 10-percent-discounted international access, domestic purchases still make up almost 80 percent of the online market, and are now out-growing international sales.

Another finding from the report is that a lot of online purchases are coming from regional areas and small towns not supported by a local shopping centre: ‘Limited access to physical shopping options in Point Cook and
other regional areas is driving residents in these top buying locations to go online instead.’


Be First to Comment

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Our Business Partners