National Australia Bank’s (NAB) Online Retail Sales Index valued online sales in Australia in the year to July 2012 at $11.7 billion. This is equivalent to 5.3 per cent of traditional retail spending for this period, up from 4.9 per in January 2012.
A majority of these online sales are being driven by domestic retailers, defined as those that are Australian for tax purposes. The share of domestic sales sits at 72 per cent, with the growth rate for domestic sales increasing by 24 per cent year-on-year in July.
Regional purchases saw a similar growth rate of 24 per cent year-on-year exceeding metropolitan areas since the start of 2011.
NAB's chief economist Alan Oster said the latest results show a notable increase in growth rates for both online sales and traditional bricks and mortar sales, however online continues to exceed traditional sales.
“We saw online sales accelerate in July 2012, up around 25% year-on-year. This represents a significant increase over the comparatively soft levels recorded in April and May. While sales by domestic retailers grew strongly, there was a marked pickup in July by international retailers,” he said.
“At a state level we continue to see Western Australia outperforming the other states, with regional WA remaining the standout in terms of per capita spending.”
Those aged in the 30s and 40s continue to click and buy with enthusiasm. They are the strongest age group for online sales. While the under 30s are lagging, they are buying from international retailers – around one-third of their spending is international, compared with around one-quarter for the other groups.
As to what they are spending their money on, online auctions, department stores, fashion, cosmetics and variety stores are winning the heart across all ages.
Regional Western Australia is still supporting online growth, recording 37 per cent year-on-year per capita growth, and online sales in the state have outperformed the rest of the country, thanks to buyers in their 30s, 40s and 50s.
“Since launching the NAB Online Retail Sales Index in association with Quantium in February, many of our clients across the retail sector are leveraging these insights to help them make future business decisions,” David Thorn, managing director, head of consumer sectors, NAB Institutional Banking, said.
“The Index shows that domestic retailers remain the dominant force in online sales as retailers take a multi-channel approach by developing an online presence alongside a traditional storefront.
“Interestingly, many of our multi-channel clients are seeing a shift in the profile of the online consumer as more customers purchase online for the very first time.
“The age group spending patterns highlights consumer preferences for ‘click and collect’ products, giving them the convenience suited to their lifestyle.
“Retailers are no longer viewing online simply as a sales and marketing channel but as a distribution and supply chain optimisation strategy. Consequently they are investing in a distribution model that sees their product being delivered to the customer when (and where) it suits them.”