The rise and rise of online retail

• Ben Irvine, and others
• The Australia Institute

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24 May 2011The online retail boom has begun and it is unlikely to abate soon. According to Southern Cross Equities (2010) domestic online retailers have doubled their market share to 4.0 per cent of 2010 annual sales up from 2.1 per cent in 2005. In addition, overseas purchases driven by a strong dollar and falling shipping prices have risen to around $5 billion in 2010 or the equivalent of around 2 per cent of total domestic retail sales. Voices from the bricks and mortar Australian retail sector have moved from dismissive to dismayed in the past 12 months due to lost sales to overseas companies but it is likely that many Australian companies will continue to capitalise on emerging opportunities and embrace this new form of commerce.

According to the Australian Bureau of Statistics the retail sector in Australia has a turnover of $243 billion per annum. The biggest segment of that is food retailing at 39.8% followed by household goods at 17.7%; cafes, restaurants and takeaway food at 13.2%; clothing, footwear and personal accessories at 7.9%; department stores at 7.6%; leaving other retail accounting for 13.2%.

The retail sector's turnover of $243 billion should be compared with total household final consumption expenditure of $715 billion which suggests that 34 per cent of household purchases are provided by the retail sector.

While the percentage of the retail sector being spent online is small, it is rising rapidly, and that growth is likely to continue to accelerate.

Authors: Ben Irvine, David Richardson, Josh Fear and Richard Denniss.