Australia's online retail industry is set to grow 40 per cent by 2012, PayPal Australia has said.
The e-commerce business, which allows payments and money transfers to be made through the internet, said large Australian retailers such as Big W had extended their presence online, providing a boost to the industry.
Online retail in Australia is forecast to reach $33.8 billion by 2012, up from $24 billion last year, according to research commissioned by eBay, which owns PayPal.
However, PayPal Australia managing director Frerk-Malte Feller said that while the industry was growing, it still lagged behind the rest of the world.
Australia's domestic retail spend online is half of what it is in countries such as the UK and US, he said.
"As Australian retailers struggle to build effective online presence, overseas competitors are taking advantage of the gap in the Australian market and are currently taking around 40 per cent of Australia's online retail spend," Feller said.
"There is a huge opportunity for retailers to capitalise on the growing online marketplace in Australia.
"In the last six months alone the average consumer spent $1223 on online shopping, an increase of $130 from the second half of 2009."
Several factors were been responsible for the slower uptake of "e-tail" among Australian consumers, he said.
Some consumers are worried about shipping costs, long delivery times and poor selection of items available in online stores.
Others are more concerned about the security of transactions, which remains the number one concern to consumers shopping online.
PayPal announced that its mobile offerings had grown significantly since its 2005 release. Last year, PayPal facilitated approximately $141 million in payments through its mobile application platform. This year, it predicts that PayPal will see over half a billion dollars of payments made through its mobile app.
The annual Online Retailer Expo and Conference is under way in Sydney this week with more than 3000 delegates registered to discuss the future of e-commerce in Australia.