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Australian Online Migration

It was in the early 2000s that the world experienced a rapid increase in online sales. Back then, the internet took the people by storm. While it was not all that intuitive unlike today, it was able to deliver exponential sales to those who took the risk.

Fast forward to 2020 and the trend has always been on a rise. There might have been instances of a fall due to economic and political factors, but even then, the presence of ecommerce is not going to disappear any time soon. As a matter of fact, a large sum of the population prefers online shopping over going to the physical stores which led to the bankruptcy of some major retail stores globally such as Toys r Us.

Australia is no stranger to the impact of ecommerce. While the general trend is going up in all countries, they do not compare to what Australia has achieved. Third world nations are not growing exponentially, unlike Australia who is in the league with the likes of China, the UK, and USA.

As a matter of fact, over the years, Australia converted a huge portion of their population to online buyers. It is estimated at around 50%, mainly composed of millennials and the middle-aged individuals. Globally, Australia ranks 10th in ecommerce sales in a global market that is expected to rise to $4.5 trillion USD by 2021.

While a lot of Australian stores have made the online migration, there are also major international companies that contributed to the said exponential growth. One of which is Amazon. With their growing customer base in the country, the mega player intends to expand its services into the region. One of the goals is to set up a warehouse in Sydney and Melbourne to further capitalize on the Australian market by making their products more accessible.

Major Online Retail Players

The Australian ecommerce growth was not solely done by small stores, but initiated and exponentially propagated by major companies. There are key players in the ecommerce industry in Australia and they have made it what it is today. With their aggressive approach of the market, it has resulted in lesser overhead costs and a paradigm shift that made ecommerce the preferred mode of shopping.

While it may seem that the major companies are taking a majority of the revenue to be earned in ecommerce, even small businesses are greatly benefitting from it. The top player in 2019 is Woolworths with $1.1 billion USD in revenue. It is then followed by Apple and Coles that gained a revenues of $496 million USD and $392 million USD respectively in 2019. These three companies alone account for 10% of the online revenue in Australia.

As these companies make ecommerce the standard, it is much easier for emerging new companies to find a market. For example, Green Cross Pharmacy experienced a 105% growth in revenue in 2019 versus the prior year. It is currently the fastest growing ecommerce platform in Australia.

Market Size and Growth Rate

At this point, everything sounds good. It seems that there is a lot of potential in the Australian ecommerce industry. So, if you have the opportunity, there is no reason for you to skip it. However, it is not all sunshine and rainbows. Taking a look at the bigger picture, this exponential growth has also created its fair share of drawbacks.

When there are a lot of business rushing into the ecommerce industry, one effect that will be experienced is market saturation. More businesses are emerging than the demand can accommodate. At this point, a trend wherein the market is starting to reach its limit in terms of growth. What this means is that the compound annual growth rate for the next four years will be 8%. Compare this to the previous year-over-year growth estimation of 12% and you can see the declining rate of emerging ecommerce businesses.

Nevertheless, the market is still huge and the potential limitless. In 2019, the Australian ecommerce revenue was at $22 billion USD. Fashion is said to have the largest share at 27%. It is followed by 25% in food and personal care, 19% in toys and hobbies, 19% in electronics and media, and the remaining 11% is allotted to furniture and appliances.

 

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