Australia's online retail sales slow to AU$16.6b year on year

Unlike last December, when the total Australian online retail sales index reached 11.9 percent year on year, the total online retail sales index for January 2015 was more subdued, due to a slowdown in domestic sales.
Written by Aimee Chanthadavong, Contributor

The latest online retail sales index from the National Australia Bank (NAB) showed that while Australia's online retail sales reached AU$16.6 billion in the year to January 2015, up 9 percent year on year, it was a decline on December's year-on-year result of 11.9 percent.

NAB chief economist Alan Oster said that the growth in online sales from 2014, while still strong compared to traditional bricks-and-mortar retail, was not as high as in past years.

"Comparable year growth in traditional bricks-and-mortar retail (up 4.7 percent) was still outpaced by the improvement in online retail. That said, recent online growth has been more subdued than the 20 to 30 percent year-on-year growth rates recorded in earlier years," he said.

"As the sector matures, the data is revealing some changing dynamics. For example, in past years, November was typically a stronger month; however, in 2014, online purchases were made later. In part, this may indicate how online retails are evolving to cater to consumer preferences."

The index showed that domestic sales contributed to 74.8 percent of total online sales in January. However, this was down from 76 percent recorded in December. As a result, growth in domestic online sales over the three months only grew by 0.2 percent.

A majority of domestic online spending during the period came from department and variety stores, which made up 33 percent of total online spending. This was followed by homewares and appliances, which made up a 17 percent share spend, and groceries and liquor, at 15 percent.

At the same time, electronic games and toys had the fastest annual online sales growth in January, up 27.3 percent year on year.

NAB head of consumer sectors Australia Peter King said the department store domination is reflective of the investment they have made as part of their commitment to providing omni-channel retail offerings to the consumer.

For example, David Jones reported last year that its click-and-collect offering boosted its online sales by 150 percent. Meanwhile, on Monday, Myer announced that its chief information officer is the newly appointed chief executive, who will focus on delivering the company's transformation project.

By contrast, growth in international sales has accelerated over the past three months, growing 0.9 percent in January.

Despite this, the index said that according to the respective year-on-year growth rates, domestic online sales continue to outpace international sales at 9.5 percent compared to 7.4 percent, respectively.

NAB said the increase in share of domestic online retailing coincided with a depreciation of the Australian dollar.

"When the Australian dollar depreciates (making overseas goods relatively expensive), the share of international spending tends to fall accordingly. This may also be attributed to on-costs such as postage, whose cost rises in AUD terms for international retailers, whereas the domestic retailer value may be unchanged, as postage is already in AUD," the report said.

NAB also found that online spending remains dominated by those aged between 35 and 44, who made up 24.3 percent of online spend.

In state-by-state terms, the index indicated that online sales grew the fastest in Victoria, at 0.8 percent, while online retail in Western Australia, the Australian Capital Territory, and Tasmania contracted.

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