News & Analysis

Why online sales should be a key strategy for every retail startup

- August 7, 2019 3 MIN READ
Amazon
 Up to $1 in every $10 spend in retail in Australia now comes from online sales, with double-digit growth in the sector pushing total annual sales towards a $30 billion market.

Australian Bureau of Statistics figures released on April 2019 revealed that Australian shoppers spent $29.23 billion on online retail over the past year, which sits at around 9% of the traditional bricks and mortar retail sector. That figure is 15.5% higher than the 12 months to May 2018.

In its most release analysis, the NAB Online Retail Sales Index grew 3.6% in May 2019 on a month-on-month, seasonally adjusted basis. The NAB index put year-on-year growth in May at 4.8%, seasonally adjusted, with the bank noting that the period January to September 2018 was one of the strongest growth periods in the NAB online retail sales index history.

The NAB’s analysis found expansion in all eight online retail categories, with the largest sales category, homewares and appliances, up 3.7% (mom, s.a.) and for the first time, the bank revealed the metropolitan and regional resident spend categories split, with city-dwellers accounting for 68% of online spending in the past 12 months. 

Most notably, the NAB Online Retail Sales Index for May found that domestic online retailers performed better in month-on-month terms at +4.1% relative to international competitors at +1.5%.

Those figures underline the growing importance of online retailing as part of the sales strategy for small business and startups looking to expand their customer base.

It’s worth remembering that the Australian arm of global e-commerce company Amazon, has been in the local market for less than two years, and the “day one” of the business is still ramping up.

In that time, Amazon Australia has grown to 125 million products over 29 categories and launched a number of products and services, such as Fulfilment By Amazon, Global Store, Prime.

This week Amazon.com.au introduced Amazon Launchpad to the local market.

The curated retail store is designed for startups and entrepreneurs to sell innovative products to Australian customers, helping them easily address the logistics of marketing and distribution, enlisting the support of the Fulfilment by Amazon centres in Sydney and Melbourne.

For the local launch, more than 150 local and international brands feature on the Australian Amazon Launchpad store.

As Mark Livings, CEO of the new Australian non-alcoholic drinks brand Lyre’s told Startup Daily, the rise of online retail “is undeniable” and brands looking to scale quickly and tackle international markets need to have an online retail strategy to succeed. 

Livings turned to Amazon Launchpad, to help his business find customers overseas quickly, bypassing the traditional sales and distribution channels. 

“By making our product available online, we’re clearly building volume and share, but it’s also precipitating a richer dialogue with traditional retailers in the geographies we’re selling into online-only,” he said. 

Online retailing will be a key driver in the success of a small business to find new markets and customers and Rocco Braeuniger, Country Manager for Amazon Australia, said Amazon Launchpad is a way to champion local brands and startups and share their innovative products with other Australians.

For small business and startups in the retail sector, online is an effective way to reduce costs and scale quickly, and the data shows that the market is transforming and growing rapidly. 

Just how quickly is revealed in Australia Post’s 2019 Inside Australian Online Shopping Report

Australia Post CEO and managing director Christine Holgate said nearly three-quarters of all Australian households are now shopping online and she expects that around 12% of all consumer spending will be conducted online by 2021.

The company’s report found that online purchases in 2018 grew by more than 13% year-on-year in every State and Territory, with the national average growing over 20%. The Australia Post Group delivered more than 3.3 billion items to more than 12 million addresses across the country last year. 

The arrival of Amazon Launchpad for startups is a reminder that the growth of online retailing in Australia is still at Day One. 

To find out more about how Amazon Launchpad can help your startup grow and succeed, check out the details online here

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