With US$27 billion in revenue in 2020, Australia is the eleventh largest e-commerce market, ahead of Indonesia and behind Canada. The market is growing rapidly, and some estimates indicate that it will reach US$43 billion in 2023. And the growth extends beyond the e-commerce-only sector. Around 75% of Australian businesses have some income from online sales, meaning that e-commerce has an important place in the hearts of consumers. In this article, we will describe the characteristics, strengths and opportunities that define the Australian e-commerce market.

Facts & Statistics

Australia is located in the southern hemisphere between the Pacific Ocean and the Indian Ocean. Australia is the planet’s sixth largest country after Russia, Canada, China, the USA, and Brazil. With an area of over 7.6 million square kilometers, Australia is the smallest continent and also the largest island on earth. From west to east, the Australian mainland measures nearly 4,000 km across, and nearly 3,200 km from Cape York Peninsula in the northeast to Wilsons Promontory in the southeast. Northwest of Australia lies Indonesia, to the northeast is Papua New Guinea and the Torres Strait, and to the southeast lies New Zealand, which is separated from Australia by the Tasman Sea. Antarctica lies to the far south of Australia, separated from Australia by the Indian Ocean.

Australia is home to approximately 26.1 million people (as of late 2022), most of whom are concentrated in the coastal regions. Only 20% of Australians live more than 50 km from the coast, which means that the majority of the country is sparsely populated. Australia’s population is concentrated in urban areas, with 5.2 million people living in Melbourne, 5.1 million people in Sydney, and 472,000 people in the capital city of Canberra.

Once part of the British Empire, Australia is now a federal parliamentary constitutional monarchy and one of the wealthiest countries in the world. The high quality of life, political and economic stability, its climate and beautiful natural landscape make Australia a popular destination for tourists and migrants alike. With a gross domestic product of $US 1.3 trillion in 2022, Australia ranks 13th on the list of the world’s top economies.

Australia comprises six states: Queensland, New South Wales, Victoria, Tasmania, South Australia, and Western Australia. It also includes the Australian Capital Territory, Jervis Bay Territory, and the Northern Territory, as well as seven remote offshore territories. Both the Commonwealth of Australia as a whole, as well as each of the states, have a constitution, a parliament, and their own government.

Language, Currency and Time Zones

Although English is not Australia’s official language, it is de facto the national language and is spoken nearly everywhere. In addition to English, hundreds of Aboriginal languages are spoken across the Australian continent. Unfortunately, many of the indigenous languages have died out, and taken their cultural heritage with them.  Most surviving Aboriginal languages have very few speakers. Around 8,000 people on the westernTorres Strait Islands still speak Mabuiag, and around 4,000 people speak the Western Desert language, also known as Wat. It is estimated that, at this point, around 50,000 Aborigines have only basic knowledge of their indigenous languages. In addition to the aboriginal languages, other minority languages are spoken in Australia by immigrant groups, including Chinese, Italian and Greek.

The Australian Dollar (AUD) is divided up into 100 cents. The Australian currency is also accepted in other countries such as Kiribati, Nauru and Tuvalu. The value of one Australian dollar has fluctuated between 0,60 EUR and 0,65 EUR, give or take a few cents, for the past 10 years.

Continental Australia has three time zones: Australian Eastern Standard Time (AEST), Australian Central Standard Time (ACST), and Australian Western Standard Time (AWST). Travelers coming from Europe will have a 7, 8.5 or 9 hour time difference in most instances, although this may vary at times due to differences in daylight savings times schedules.

Internet Usage: Trends & Insights

With US$27 billion in revenue in 2020, Australia is the eleventh largest e-commerce market, ahead of Indonesia and behind Canada. The market is growing rapidly, and some estimates indicate that it will reach US$43 billion in 2023. E-commerce revenue is expected to grow by 10.40% annually, which leads to a projected market volume of US$64 billion by 2027. User penetration in 2023 will be about 76.0% in 2023 and is expected to reach 77.6% by 2027, with an expected average revenue per user (ARPU) of US$2,150. This makes Australia a very appealing target market for e-commerce retailers.

In 2022, 91% of Australians had access to the internet, and the number of internet users is expected to exceed 23.3 million by 2025. Like the residents of most developed countries, Australians have fully integrated the internet into their daily lives, using it to send emails, search for information, enjoy digital entertainment, and purchase goods and services. As in most countries, Google is the search engine of choice in Australia, accounting for 94% of all searches. Microsoft’s search engine Bing has a small market share of just over 3.5%.

When shopping online, Australians typically pay with digital wallets or debit cards. In 2019, 52% of e-commerce transactions were paid for using cards and 22% using digital wallets such as PayPal. Unlike Europe, bank transfer is not a particularly popular payment method, with only 13% of purchases paid for using bank transfers. Only seven percent of e-commerce transactions were paid for using cash. Debit cards are in much higher circulation than credit cards in Australia, with 1.9 debit cards per capita vs. 0.68 credit cards.

Opportunities & Challenges

Australia has one of the fastest mobile internet speeds in the world, which is a boon for e-commerce. This fact has no doubt contributed to the fact that mobile e-commerce is becoming ever more popular in the Australian e-commerce market. If you are planning to target the Australian e-commerce market, you will definitely need to take this into account. Mobile-responsive websites that offer a convenient, enjoyable shopping experience on any device are no longer just “nice to have”. They are essential.

Localization for Australia is, in some regards, relatively easy. You will likely have an English translation of your website and product catalog already. However, these should be localized specifically for Australian English, and you’ll need to display prices in AUD.

If you want to sell products in Australia via a marketplace, there are many popular marketplaces to choose from. Some of the most popular are:

  • com.au: 2 out of 3 Australians have bought something from ebay, and the site has 11 million visits per month.
  • com.au: launched in 2017 and has around 30 million customers.
  • com.au: requires a vetting process for new customers and serves around 3 million customers
  • MyDeal: a great choice for lifestyle and home products, with around 550,000 customers.
  • GraysOnline: has been online since 2000 and has around 3 million customers

You’ll also need to take the size of the country into account when planning your logistics. Because the country is so large, and the less urban areas are so sparsely populated, delivery times are longer than in most other countries. The population density in Australia is only 3.1 people per square kilometer. For comparison, the Netherlands has 488 inhabitants per square kilometer.

Import duties, taxation & import procedures

To start a business in Australia, you’ll need to register for an Australian Business Number (ABN), even if you are a non-resident. Non-residents must first apply for an ABN. This process can take time as the application must be submitted in paper form and original copies must be certified. If you are selling goods to Australian consumers, but do not register a business in Australia, you may be able to skip this step.

In Australia, foreign companies are generally subject to sales tax, which is called Goods and Services Tax (GST). The exact volume of sales, as well as whether you import and store goods in Australia, will change your precise tax obligation. If you expect to sell goods worth more than A$75,000 within a period of 12 months, you must register for GST and pay 10% sales tax on all sales.

You should also bear in mind that 10% GST is collected by customs for all imported goods. However, registered companies are entitled to deduct this amount from their sales tax owed. Depending on the country of origin of the goods, there may be a free trade agreement that simplifies the import procedure.

Summary

Australia is an interesting target market, with a rapidly expanding e-commerce industry. The population is young and tech-savvy, and a broad base of consumers enjoy shopping digitally and paying electronically. Companies that want to successfully enter the Australian market must tailor their website localization to the Australian market, and should offer mobile-optimized shopping. Although its location and size make Australia a logistical challenge, the reward can be great for businesses who launch successfully in this lucrative market.



Sources