Growth in ecommerce is expected to decelerate in Australia in the second half of 2022, according to analysis by GroupM.
The market is reverting to traditional seasonal peaks and valleys as the nation cycles out of lockdowns.
GroupM estimates Australia’s e-commerce market will grow by 8.4% in 2022, below last year’s growth of 24% as well as the pre-pandemic three-year compound annual growth of 15%.
Total retail is forecast to be A$504 billion for the full year with e-commerce accounting for 8.7% of this.
By 2027 retail sales could amount to A$602 billion with 19% of retail occurring via ecommerce channels.
Sean Bone – GroupM Australia GM of Commerce: “Without the rocket-fuel of lockdowns driving both demand and investment, growth is increasingly driven by sticky value propositions and a focus on customer lifetime value.
"While the surge and high-growth or e-commerce in recent years saw businesses quickly pivot to adopt ecommerce at all costs, these changing market dynamics require a more savvy and nuanced approach to e-commerce growth in the future, and to meeting consumer needs through omnichannel strategies.
“The current cost of living crisis, may well impact consumer confidence, but is unlikely to impact the broader shifting of behaviours towards online.
"E-commerce now represents 9% of Australian retail sales, when we exclude food sales to provide an apples-with-apples view across markets. That figure will double to 19% over the next five years. In turn, that market power will fuel the continued growth of Retail Media. There we see ongoing expansion of offerings and audiences, beyond their native platforms, as well as the entrance of new players providing healthy competition.”
Digital commerce in Australia has seen 400,000 fewer monthly active shoppers, impacting discretionary purchases and mega sales sites, however stickier platforms and propositions have seen continued growth, including up to 50% year-over-year growth in grocery, according to company filings.
Half of digital commerce sales volume is coming from only 13% of households, so the ability to attract, retain and grow sales through high customer lifetime value cohorts is proving key to long-term sustainable growth.
Growth in the second half of 2022 in Australia is expected to decelerate as consumers cycle out of lockdowns and revert to traditional seasonal peaks and valleys.
Food and beverage delivery, a top-three category, saw a material slowing of demand in June while still delivering the fastest growth of any vertical.
But the overall ad market for e-commerce continues to expand, with more products becoming available across a growing number of platforms.
These audiences are increasingly activated in the mid- and upper-funnel, but the importance of operating owned channels is growing as consumer acquisition costs and return on ad spend come under pressure.
Retail e-commerce marketing leaders are firmly establishing themselves in Australia. EBay has continued to innovate and show resilience following a period of deceleration, retaining its top position in the local digital commerce traffic.
Amazon continues to outperform, with traffic up 20% versus the prior year, according to SimilarWeb.
Grocery and fashion categories are still seeing significant growth, with Coles and Woolworths both reporting about 50% year-over-year growth in calendar Q1.
Click-and-collect remains a key pillar supporting this increase, with published data showing a consistent 14% of sales, even as household penetration sits at just under 10% for this vertical, according to Australia Post.
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