National Australia Bank’s (NAB) latest Online Retail Sales Index shows Australians spent $14.9 billion online in the year to January 2014, up $1.9 billion or 11.3 per cent on the previous year.

While online sales slowed marginally to 1.3 per cent in January, the overall improvement in recent months means online sales are outstripping traditional retail in terms of growth.

Strong year on year growth was experienced in groceries and liquor, up 27 per cent; electronic games and toys, up 22 per cent; and media, up 18 per cent, although media has lost pace in recent months. Daily deals and personal and recreational goods experienced the weakest growth.

A substantial gap also now exists between growth in domestic and international online retail sales. International online sales have virtually stalled in recent months, with seasonally adjusted three month moving average growth just 0.3 per cent. This slowdown is likely tied to the lower Australian dollar.

By comparison, domestic retailers continue to control the largest share of online sales, which has edged marginally higher to around 74 per cent of the market.

Commenting on the findings, NAB chief economist, Alan Oster, said that despite a recent pick up in traditional retail growth, it is still outpaced by the improvement in online retail.

“With the improvement over recent months, online sales have returned to growth rates far exceeding traditional retail sales,” he said.

“In the year to January, the main contributors to the growth in online retail sales have been department and variety stores, media, and groceries and liquor, which together accounted for 74.4 per cent of the total increase in sales.”

NAB’s retail sector head, Tiernan White, said: “We are seeing our domestic retailers increasingly developing a quality online presence alongside their traditional bricks and mortar offering”.

“The department and variety stores category recorded the highest share of total online expenditure in the year to January at 34 per cent, followed by homewares and appliances with 17 per cent share of spend, and groceries and liquor with 15 per cent share of spend.”

Online sales were equivalent to around 6.5 per cent of traditional retail spending, up from 5.8 per cent for the same time last year.

To view the full report, click here.