eCommerce in Australia: Market, Online Stores, Strategies 

eCommerce in Australia: Key Insights

• Online delivery services and eCommerce played a vital role in boosting sales and helping businesses recover during the Covid-19 pandemic in Australia.

• The top online shopping categories in Australia are Food & Personal Care (28.6%), Fashion (25.4%), Toys, Hobby & DIY (21%), Electronics & Media (15.9%), and Furniture & Appliances (9.1%).

• The success of major players like Woolworths, Coles, Apple, JB HiFi, and Officeworks can be attributed to their consumer-centric strategies, investments in digital platforms, and a multichannel approach that includes direct-to-consumer (D2C) sales.

Australia's economy took a few hits during the Covid-19 pandemic. Melburnians were mostly stuck indoors as they endured the world's longest cumulative lockdown, which lasted 262 days until October 22, 2022, according to Statista. Online delivery services became the lifeline for businesses to boost sales and recover. For the consumer, buying groceries online, home entertainment solutions such as a new TV or taking up new hobbies were all in the spotlight during the peak of the pandemic.  

Looking at our markets section, the top five players by net sales in 2022, namely Woolworths, Coles, Apple, JB HiFi and Officeworks, cater to the needs and wants of the Australian consumer. Let's take a closer look at the dominant factors behind their success.  

What Are the Main Categories For Which Australians Shop Online? 

Food & Personal Care is the largest market, accounting for 28.6% of Australian eCommerce sales. This is followed by Fashion with 25.4%, Toys, Hobby & DIY with 21.0%, Electronics & Media with 15.9%, and Furniture & Appliances with the remaining 9.1%. Grounds for eCommerce in Australia are fertile, with revenue from eCommerce in the country expected to grow at a compound annual growth rate (CAGR) of 10.4% between 2023 and 2027. The market is expected to reach a volume of US$64.2 billion by 2027, according to our analysis.  

Woolworths, which has been in the retail business since 1924, is the leading player. Despite their advantage in scale, the retailer has maintained a competitive edge by implementing consumer-centric strategies, investing in physical store upgrades and its digital platforms over the years, such as the Woolworths App and Wpay, a standalone payments business and one of the largest card payments processors in Australia¹. They were launched in 2011 and 2021 respectively.

In September 2021, the multichannel retailer also launched the Everyday Market, making more products available to consumers and expanding beyond Food & Personal Care essentials into other areas such as Home Appliances and Consumer Electronics among others ². While weekly store visits return to pre-pandemic levels, engagement with their online store continues to grow exponentially.  

Convenience is also offered to customers through online delivery solutions such as Woolworths Direct to Boot and Click & Collect via their website. Similarly, Coles, another big player, has also taken the approach to invest in its online retail platforms and making the shopping experience more integrated between their physical and online stores. In 2022, Coles Online increased its network coverage, with 95% of Australians having access to home delivery ³. 

The retail giant's Click & Collect network has expanded to more than 740 stores. Click & Collect/Boot of Car option is also available in more than 670 stores. This means that after ordering groceries online, customers can have them loaded directly into the trunk of their car at the store's designated pickup location. Coles has a clear focus on immediacy and convenience. Their Click & Collect Rapid, a 90-minute shopping turnaround service, has expanded to more than 450 stores in Australia, while same-day home delivery to more than 520.  

Who is the Biggest Electronics Retailer in Australia? 

Meanwhile, JB HiFi, with the market advantage of its large scale and low-cost operating model, has also opted to enhance its strategy, focusing on its supply chain and online presence by upgrading distribution centers and their website ⁴. On the other hand, Apple has been in the Australian market for 41 years. It's brand exclusivity, design and Internet of Things (IoT), which allows its users to sync data across different Apple products, has accounted for most of its popularity around the world and in Australia. 

Although not strictly in the Electronics & Media category, Officeworks which sells all things office-related including laptops, stationery and furniture, among others, is also one of Australia’s most successful online stores by net sales. In an interview ⁵, Officeworks chief executive officer Sarah Hunter said the company takes a consumer-centric approach by making sure it offers solutions for every channel. This means that their physical stores, online store, and business operations team are all connected, not separate. 

Multichannel Service Options Continue to Entice Online Shoppers in Australia 

Australian consumers who shop online have three main motivations. According to Statista's Consumer Insights, the first is the value of home delivery, with 58% of online shoppers agreeing that it offers convenience and ease. Second, the prospect of lower prices attracts 52% of consumers who appreciate the potential cost savings associated with online shopping. Finally, convenience itself is a major driver, with 51% of shoppers recognizing the time-saving benefits and flexibility that online shopping offers. 

A clear trend among all of these stores was their multichannel approach, selling products through multiple avenues, with eCommerce being one of the most dominant channels. Another trend is that they all conduct commerce through their own website, i.e., they sell directly to consumers (D2C) without a third-party intermediary involved. This strategy is not only useful for sales, but also for companies to maintain a higher level of autonomy over their brand. 

Australia’s Top Online Stores Sell Food and Grocery, Electronics, and Office Supplies 

Australia's top three markets are Food and Personal Care followed by Fashion, Toys, Hobby & DIY. However, Electronics & Media, along with Furniture & Appliances also show great promise in eCommerce. When asked why Australian businesses are increasingly turning to online commerce, the answer is simple: it's where the customers are going. However, it is worth noting that the Australian government has also provided a high level of support for eCommerce through trade agreements and other local government partnerships to stimulate the economy. Read our insights article to learn more.

Sources

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