Ecommerce Down Under

On the surface, Australia looks like a relatively easy place to do business, and it would be an easy assumption to make that their ecommerce market is the same as ours in the UK. Although similar in culture, our friends down under have a very unique retail landscape. Australia has been talked about for years as being the ‘next big thing’ for ecommerce, so with the help of UKTI I decided to take my own adventure down under to investigate the country’s potential.

Australia boasts one of the highest uptakes of the internet in the world, with just under 90% of the population online, or roughly 19.5 million internet users. With a strong Australian dollar, common language and relatively generous tax treatment which doesn’t require duty on imports under AU$1,000, you might reasonably expect that the market was ideally set up to have a strong ecommerce market, yet despite these apparent benefits, the country is relatively new to the ecommerce game. Until recently many Australian retailers didn’t even have transactional websites. David Jones is one of the largest retailers in the country and only entered into the online world in 2012!

Historically consumers were resistant to ecommerce largely due to their scepticism of online payment security. However, with the introduction of reliable payment methods and competitive product pricing consumers have been given a much needed confidence boost when it comes to shopping online.

That’s not to say that the country is without its challenges. Although it has a huge geography, (Australia’s area 7.6 million square kilometeres – makes it the 6th largest landmass in the world) the country is relatively empty. A single postcode in the Northern Territories is roughly the same size as South Africa and yet only 15, 484 people live there!

The time difference can be another issue, with the Australian east coast being nine hours ahead of the UK in summer and 11 hours in winter. There is then the distance between geographical places to contend with. It takes almost five hours to fly from Sydney to Perth or eight including the time difference, making logistics and delivery a tricky task to tackle – but not impossible.

It’s easy to see why setting up business in Australia could seem like a bridge too far for many companies but a growing number of savvy Australian and foreign retailers moving into this market gap are doing very well – Next and Asos to name but a few. While this online shopping activity is small, it’s accelerating rapidly, according to the National Australia Bank.

UKTI, which works with UK-based businesses to improve their chances of success in international markets, is a great starting point for anyone looking to expand in this market. It is a great source of advice offering support in market research, introduction to new contacts and helping you to find distribution partners.

Looking at the predicted growth of ecommerce in Australia by the year 2016, the spending is expected to grow in the range of about $ 27 billion. The market is ripe and ready for retailers to offer online shopping. So what are you waiting for?

  • If you are going to sell to AU consumers, you really should get a domestic merchant account. Otherwise, cardholders will incur an Int’l Transaction Service Fee – billed by the card Issuer. Nothing the merchant can control.

  • Pete Harrington

    Best thing to do @John, is if the merchant simply sets up an Australian Dollar merchant account number with their payment provider – that means once configured in their shopping cart system, the merchant takes payments in the user’s currency (in this case Australian Dollars) thereby removing in one fell swoop, conversion fees.

    In short, the merchant then shoulders the fee, not the customer.