Marketplaces lead as online steams ahead

Online Shopping 1Online marketplaces like Ebay, Amazon and Alibaba saw “massive growth” in 2017.

That is according to Ben Franzi, general manager for parcels and express services at Australia Post, which today released its annual Inside Australian Online Shopping Report.

While the e-commerce sector as a whole grew 18.7 per cent in 2017, marketplaces on average grew 74.8 per cent, according to the report.

Franzi declined to share the growth rates of individual marketplaces but noted that Ebay represents around 25 per cent of Australia’s entire e-commerce market.

 “Australians really appreciate the convenience of being able to access goods from a variety of sellers in the one location,” he said.

Citing the entrance of new marketplace players – like Myer and Catch – he called 2017 “the year of the marketplace”.

Franzi said it was too soon to say what impact Amazon has had on Australia’s e-commerce sector, since the marketplace launched Down Under last December, but he noted an overall “halo effect”.

“In the lead-up to them launching, they copped a lot of press. For almost six months, you couldn’t pick up an article without reading about them. But they raised the visibility of online shopping for the average consumer,” he said.

According to Australia Post’s report, Australians spent $21.3 billion online last year, with fashion the top-selling category, increasing 27.2 per cent in the past year, health and beauty products growing 13.2 per cent and homewares and appliances growing 10.9 per cent.

Franzi expects e-commerce spending to reach $25 billion in 2018, which would account for around 8 per cent of overall retail sales. One in every 10 sales could transpire online as early as 2020/21, when e-commerce spending is predicted to reach $35 billion in Australia.

Franzi said it is “debatable” whether Australia will ever catch up to markets like the US and UK, where the share of sales occurring online is already firmly in the double digits.

China opportunity 

While 80 per cent of e-commerce spending went to domestic retailers, a bigger share of the dollars going to overseas online sellers went to Chinese sellers, according to the report.

“I can say that international outbound out of China is growing well over 40 per cent,” Franzi said, adding that much of this spending occurs on marketplaces like AliExpress, Alibaba’s marketplace for consumers outside China.

“Aussie consumers are definitely buying more from AliExpress,” he said.

Australian retailers continue to use marketplaces like Alibaba’s Tmall Global and JD.com to access the lucrative international market, the total online spend of which has increased 46.7 per cent to $2.08 trillion in the past two years.

Fashion, health supplements and other wellbeing products and cosmetics are among Australia’s most popular online exports.

Meanwhile, Australia Post’s recent move to open a ‘box store’ in the Sydney suburb of Chatswood underscores the growing importance of ‘daigou’ as a way for Australian brands and retailers to reach Chinese consumers.

The Australia Post store stocks in-demand products and packing material and only ships to China. It is specifically targeted at daigou, Chinese consumers who buy items in Australia and ship them to friends, family and other customers in China.

“The daigou work has been going on for a number of years. It’s quite popular but limited to specific categories like health, beauty and baby,” Franzi said.

“What we’re doing is purely a concept store. It’s not a post office, it’s replicating the box stores you seen when you walk through Chinatown or Box Hill. We’re seeing whether that works or not under the Australia Post brand,” he said.

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