Australian Online Retail Spending Up 29% in 2011

Although online sales accounted for only 5 per cent of total retail spending in 2011, it grew at an incredible pace of 29 per cent while traditional retail store sales went up by a mere 2.5 per cent.

The trend, contained in the first Online Retail Sales Index made by the National Australia Bank (NAB), confirms the observation of retail experts the past few years of the changing consumer behaviour in Australia which reflects global patterns as commerce shifts toward electronic transactions.

Although online spending was just 5 per cent of the $10.5 billion Aussies spent in 2011, NAB chief economist Alan Osler forecast online retailers would get a larger share of the pie in the coming years.

"I think as consumers get more relaxed in using the Internet, it's obviously going to keep growing and if it keeps growing at 20 per cent, then in five years, online spending would have doubled to 10 per cent and so on," Mr Oster said in a statement.

Although 75 per cent of online sales in Australia were made by domestic retailers, the report said spending with overseas retailers grew at a faster pace at 40 per cent in 2011 compared to 25 per cent growth rate for local online stores.

As a result, while brick-and-mortar retailers are declaring bankruptcies, closing outlets and going into administration in the past few months, online stores are growing in number despite the generally weak consumer confidence level in Australia.

Online stores have the advantage of less overhead expenses in terms of rental and staff. For those that need to build more awareness around their brand, they could open pop-up stores for a few months which even boost the sales of online stores.

"Changing consumer preferences and spending habits are, no doubt, causing some structural changes in the retail sector," added NAB Head of Consumer Sectors David Thorn.

"Retailers need to realise the way they have been interacting with their customers has changed," said Mr Oster.

Retail expert Dr Gary Mortimer from the Queensland University of Technology, however, pointed out that online shopping is not yet a major force in the retail industry. He said consumers opt for online stores mainly to find and trace lower prices.

"This is particularly evident for home electronics and entertainment products, where shoppers will still want to deal with experienced sales people and have the ability to return faulty goods for a refund, exchange or warranty repair," he told ABC.