NSW, Queensland and Tasmania leading the online shopping race: Research

Digital businesses in New South Wales, Queensland and Tasmania are reaping the benefits of Australian consumers’ love for online shopping, with businesses in the states seeing their annual turnover jump by up to 13%, despite Australians spending $124.1 million less online than a year ago according to new research.

Global payments fintech Airwallex released its first Digital Economy Index on Monday, revealing online businesses in NSW have seen a 12.94% jump in turnover over the last year, while those in Queensland and Tasmania have seen their turnover increase by 6.14% and 1.9% respectively.

However, online businesses in Victoria saw a 25% hit to turnover, South Australia was down by 13.6% and Western Australia by 36%. While Victoria and WA saw significant decreases in turnover for their online businesses through the year, the Index showed income rebounded in the latest quarter, indicating green shoots for growth in 2023.

The research, which was based on an analysis of a representative sample of 1000 Airwallex customers, also found retailers in Queensland and Tasmania benefitted from more online tourism spending, while the boom in NSW was driven by an increase in local e-commerce income. Victorian online businesses slumped from a lag in attracting the education dollar, while the SA and WA declines appear to be driven by lower tourism spending.

Byron Bay Gifts founder Zoe Gordon says while it’s concerning to see a decline in online spending nationwide, it is encouraging to see that online businesses in three states have recorded increased turnover over the last year.

“We have noticed a downturn in sales in the last 12 months, however, we are already starting to see these figures climbing back beyond pre-Covid figures,” she told SmartCompany. 

“We attribute this downturn to comparing the last 12 months to Covid sales, which provided a significant increase in revenue to a lot of online businesses. These figures were increased during lockdown, which would have seen shoppers confined to an online shopping environment and no access to retail stores. 

Gordon, whose e-commerce business was turning over more than $6 million a year during the pandemic, says it is particularly encouraging to see the turnover increases in NSW, Queensland and Tasmania considering the number of interest rate rises over the past 12 months. 

“It’s interesting to note that the states that have had a downturn in online sales were some of those that experienced longer or stricter lockdown conditions. Melbourne for example, had the longest lockdown period of any city on Earth,” says Gordon. 

“Additionally, it’s great to see education and travel spending on the rise, indicating a positive shift in consumer behaviour — this is also indicative of the Australian consumer coming out the other side of lockdown conditions and to be expected.”

Amelia Hamer, Airwallex’s director of strategy for ANZ, says the Digital Economy Index shows overall spending was flat with online businesses in Australia with a slight 0.07% annual decline, which highlights how they are holding up in the face of a negative economic outlook.

“Online businesses are holding more strongly than other parts of the economy but the data shows they aren’t immune from the economic headwinds the world is facing,” Hamer said in a statement. 

“The figures indicate the post-COVID economic recovery is patchy, in full swing across some areas while South Australia and WA, as well as Victoria, continue to struggle.

“There’s an alarm bell for some businesses that rely on international purchases, with the Index highlighting they’ve dropped by 6% since last year, but domestic online consumption has made up for it. Local businesses are increasingly becoming Australians’ first choice for online shopping.

Hamer said consumers are still drawn to spend with digital brands, but their reliance on them has waned post-lockdowns. Australian online businesses need to work harder to find opportunities to grow their income and revenue.

“Those smaller businesses that are still feeling the squeeze from the downturn need to keep focused on using the tools that will cut their costs, so they’re well positioned for when conditions pick up again,” she said.