Every century produces innovations in technology, science and consumerism. The rise of the internet during the turn of the 21st century generated a massive shift in how people consume products and goods. With everything available at the click of a mouse, more and more people are buying products online. But where are the products coming from? More importantly, if Australians are buying online, what countries are profiting?
The presence of Amazon and eBay have facilitated a significant transition from buying from Australian businesses to buying goods imported from abroad. It isn’t easy for many consumers to see the direct consequences of this instant buying behaviour, so we’ll look at the statistics to demonstrate why it’s pertinent to buy Australian goods and keep money in the country.
In 2019, Australians spent a grand total of A$28.6 billion making purchases online, according to National Australia Bank Economics. By 2021, that number is expected to increase by 7% and continue rising, placing Australia at #10 for the largest online shopping market in the world. For those in the e-commerce industry, these statistics initially come as good news. Economics provides insight and projections into business trends on the rise. Yet just because Aussies are opening their wallets to the web doesn’t mean they are buying from Australian companies. In fact, it’s quite the opposite.
Goods and services that people bought locally are now coming from overseas. What does this mean for Australian businesses? More importantly, how much Australian money is funnelling out of the economy as megastores like Amazon and eBay infiltrate the market? And lastly, where is all the money going?
Many consumers buy products online out of sheer convenience. Yet convenience most often comes at a price, which turns out to be pretty high.
If the multi-billion e-commerce industry in Australia isn’t putting consumer dollars into the economy, where is the money going? According to Shopify, one of the major online retail platforms for e-commerce businesses, 57% of online shoppers are buying products from overseas. The primary supplier? China. And that’s not the only country enjoying hard-earned Australian money. Here’s the breakdown of where the money goes when it jet sets out of the country via online shopping and galivants across the world.
40% of purchases came from China
21% were from the United States
14% were from the United Kingdom
6% were from Hong Kong
3% were from New Zealand
16% were from various locations around the globe
The bottom line is that Aussies are peppering their cash around the globe. But just how much money are we talking about here?
When eBay opened its digital doors in 1995, it rapidly became a global phenomenon. Now, eBay Australia’s website is the most popular retail website in the nation, with over 12 million unique visitors every month, according to netohq.com. eBay in Australia is so popular that every single minute, a visitor buys a smartphone.
The facts state it louder than we can: Aussies spend most of their money buying retail goods online from eBay. In fact, eBay revealed that Australians spent roughly A$847 million on eBay in 2018. The success of eBay in Australia has led many analysts to speculate on the effects Amazon Australia will have on the retail pioneer.
Local businesses wait with bated breath to see if they can squeak by as the two mega-retailers battle it out. Since the introduction of Amazon Australia in 2017, eBay has held its own. What does that mean for Amazon Australia and Australian businesses striving to compete amongst giants?
The Amazon marketplace in Australia is now a toddler and rapidly developing with every year. In 2017, Amazon launched Amazon Australia, which offered consumers the option to buy goods without global shipping fees. Excellent news for consumers, right? Sure, whatever you want will arrive within 1-3 days with no shipping fees for Prime members. In Amazon’s global domination, a 24,000 square metre fulfilment centre flagship opened in Melbourne, and a second South-West Sydney location quickly followed. Now, Amazon ranks at number 15 on the Power Retail list of most popular online retailers for Australian buyers, falling behind both Australian and U.S. chain retailers like Woolworths and Target. But it’s still early for the e-commerce titan.
Amazon promises an economic boom thanks to the new expansion, with thousands of jobs created and the opportunity for Australian businesses to put their products on Amazon’s e-shelves. But grand visions rarely match reality. The bottom line is that Amazon Australia more often benefits international retailers than local ones.
What is the exact number that Australian businesses are up against? In 2018, Amazon Australia collected A$426 million in sales. Even with a substantial loss after taxes, analysts estimate that within seven years, the company will dominate among Australian e-commerce retailers.
Amazon is strictly following its prior model for success. Despite rough starts in Canada and Europe, within seven years, Amazon reigned the king of e-commerce. At the moment, Amazon Australia has produced nothing but loss. But don’t let those red numbers fool you, the company is in it for the long-haul and willing to lose billions of dollars before turning a profit and effectively dominating the Australian online retail industry.
In 2019, only 6% of Australians regularly made purchases from Amazon Australia, according to Power Retail. But what can we project that figure will be in 2024 when Amazon reaches its seven-year-sweet-spot? And in the interim, what can Aussie owned businesses do to stay in the game and bring in steady sales? To start, we need to advocate for Aussies to use their dollars to support local businesses.
With global expansion comes the opportunity for Australian businesses to broaden their reach to consumers around the world. As such, many local companies have to join the game or get left behind. As more Australian owned businesses make their products available on eBay and Amazon Australia, the margin of overseas retailers can narrow over time. To support this transition, citizens need to buy Australian products, which will support the nation’s economy and keep money in Australia.
And that’s not the only benefit: Australian goods are made locally, significantly enhancing the quality and lifespan of the product. Plus, you know exactly where your item comes from and who made it.
Wherever you buy products online, buying from Australian stores keeps money in the country, where it can circulate to support a healthy and thriving national economy.
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