Expand into Australia: an exciting and fast-growing ecommerce market
Australia, a.k.a. Oz or Down Under, is a land of global eCommerce opportunities. Crowded with international eCommerce outlets, Oz is an exciting and fast-growing market for online sellers from abroad.
Australians, a.k.a. Aussies, want foreign sellers to offer their products in their country. In this isolated land, a wider choice of products, better prices and more convenient shipping options are always welcome.
Online sales potential can definitely be found Down Under.
First, the majority of Internet users in Australia are online buyers. Second, there’s a big shift to foreign websites for online purchasing. Third, the high Internet penetration and smartphone usage makes Oz an attractive destination for online sellers who want big sales figures in the furthest reaches of the globe.
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A few facts about the Australian marketplace
One third of Australia is desert.
Kangaroos are delicious but can’t walk backwards.
Koalas have fingerprints similar to those of humans.
The name Kylie derives from the Aboriginal word meaning ‘boomerang’.
Facts related to Australia and its wildlife awaken interest not only among Oz enthusiasts and keen travellers. We’re also curious about kangaroos, koalas, wombats and Aboriginal facts and artifacts, but this article will be a different kettle of fish: eCommerce in Australia.
Let’s start with a few facts and figures related to the Australian marketplace:
- Australia boasts the second highest digital buyer penetration in the Asia-Pacific region.
- The biggest eCommerce sites in Australia are Amazon, eBay Australia and Gumtree.
- Over 90% of the population has access to the Internet.
- Around 30% of consumers spend more time buying online than in traditional stores.
- According to National Australia Bank, in 2015 online retail spending in Oz increased by 10%, to $17.6 billion.
- According to Google’s Consumer Barometer, the Australian marketplace can be characterised by high mobile penetration. In fact, one of the highest in the world (an average of 3.1 devices per person). All the same, retailers are struggling to provide a great mobile experience according to Episerver’s Mobile Commerce 2015 report.
- Australian eCommerce growth looks promising for 2017 and 2018 and is forecasted to be an upward projectile; with 6.3% and 6.6% growth respectively.
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The Australian consumer
Australian consumers are tech-savvy and keen online shoppers. In 2013, Nielsen reported that 82% of Aussies were online at least once per day. The weekly digital media engagement in turn was 23.3 online hours per week.
60% of Australians use both online and traditional retail. eCommerce shipping is convenient so many Aussies like to check out items in the store and then check prices online and pick out the best option.
Here’s the deal…
Bear in mind that in Australia, retail density and diversity may be quite low. Hence, offer a variety of products which local buyers are likely to find very attractive.
What to do to be more popular with Australian shoppers?
- Highlight that it’s extremely convenient to buy from you, e.g by offering fast shipping.
- Keep your site inviting and user-friendly.
- Limit the clicks needed for buyers to make a purchase.
- Communicate clearly and provide service level options.
- Give Australian buyers additional options, e.g. choosing delivery dates / times. They will love being given more control over their purchases.
This is where & why Aussies like to shop online
According to the infographic published by PayPal, Australians spend $ 6.4 billion overseas. 14.9% is spent via mobile and tablet.
Among top items purchased are…
- … clothing, shoes & accessories, books, airline tickets, health & beauty products, personal electronics, computer hardware, computer software, home electronics.
Among the top factors that have an influence on finalising the purchase are…
- … a better price, free shipping, good quality and variety of items sold, fast delivery, return policy.
Among the concerns with shopping overseas are…
- … the fear of fraud and identity theft, the need to enter personal details, the lack of familiarity with payment methods.
Among the reasons for stopping a transaction are…
- … the necessity to register a user account, extra fees that come with a chosen payment method, the necessity to share credit card details over the Internet, slow payment process, the need to re-enter details for every online transaction.
Popular categories sold online in Australia
According to PowerRetail’s infographic, popular categories bought online by online shoppers are:
Payment methods used by Australian consumers
Most sites support credit cards, such as Visa, MasterCard or American Express as well as debit cards. PayPal is less common. Some sites also support cash on delivery offered by Australia Post.
Another payment service in Australia is a real-time bank transfer, POLi offered by Australia Post. It enables sellers to accept payments from buyers with an Internet-enabled Australian bank account.
Electronic methods of payment are common, but here’s an interesting fact…
… the classified ad site, Gumtree, suggests actually meeting the seller to verify the product before making the payment.
Online sales & social media in Australia
Australians are active on social media. They also use it to make purchase decisions. According to Sensis, about 20% of consumers use social media to research products. 58% of consumers reported that their social media research led to a purchase. Hence, online sellers should use social media to establish their presence and invest in social media marketing.
A few facts on shipping
Australia is an isolated country. It takes hours to get anywhere that can be called… abroad. This means that many Aussies appreciate the convenience of having goods delivered to their home address.
Especially the ones living in remote locations appreciate it when they don’t have to drive to a regional mall to pick up their orders. Such consumers from more isolated areas also tend to shop online more often than buyers from big cities.
Aussies are investing in building and improving infrastructure. However, as of now, Australian buyers accept longer delivery times and higher shipping costs. It’s rare that orders are delivered on the same day unless they’re in larger cities.
This may be one of the reasons why Amazon hasn’t built a local fulfillment network in Australia. Amazon AUS directs users to buy physical products from Amazon US. Amazon AUS offers only electronic items, such as ebooks, audio books and apps.
How about free shipping?
In fact, free shipping is not so common in Australia.
Before offering free shipping, many Australian eCommerce sites, for example The Iconic or Catch of the Day, have a minimum purchase requirement.
Australia is a source of cross-border trade opportunities
Australians like purchasing from sellers in other countries. The main reason for this is the fact that there are no taxes or customs duty on orders below AU $1,000. According to one study, 63 % of Australian buyers will shop from abroad, which ranks them first worldwide.
Products imported from overseas may turn out to be cheaper for many Aussies. After all, Australia is one of the most expensive countries in the world. It simply makes sense to go for cost-effective product counterparts ordered abroad. Hence …
… foreign offerings marketed in and shipped to Australia are not unusual.
Australia & the USA are VAT havens for European online sellers
Australia and the USA, especially the former, seem to be distant countries in which selling internationally may be too risky for a European business owner. However, there are profits for European sellers of which many may not be aware!
It’s about the value-added tax …
Listing on eBay in the USA and Australia is actually even more profitable for European retailers who are registered for VAT than for their counterparts located in the USA or Australia.
This is where it gets interesting…
… European retailers who are registered for VAT don’t have to pay VAT when selling into the USA or Australia.
This means that their products can be more competitive in terms of price which can be up to 20% lower. Data analysed on 300 professional sellers showed that those who removed their VAT in Australia and the USA have increased their sales by 100% in those countries.
Check the infographic below and read about 5 reasons why you should list in Australia and the US.
Better yet: start selling in Australia & the US with us!
In a nutshell
For many online sellers, Australia brings to mind an isolated country situated at the end of the world. Its location, however, can be treated as a big eCommerce opportunity. After all, wouldn’t those living in an isolated land be happy to have more online shopping options and better prices?
This is where international global sellers can benefit from the potential that the Australian marketplace has in store.
Australians are keen online shoppers and would be happy to be offered cheaper options and a bigger diversity of products. Additionally, VAT-related opportunities for European online sellers can make their offers even more competitive compared to local merchants.
Are you considering venturing into the Australian marketplace? Australians like purchasing from sellers in other countries so this may be a great opportunity for your online business!
Are you already selling your products in Australia? Share your experiences with us in the comment section below!
Further reading & other sources
United States: global eCommerce superpower