Author: Jonathan Matchett, UK Managing Director, wnDirect
Australia is ranked as one of Asia-Pacific’s most highly developed eCommerce markets offering a substantial market size and a tech savvy customer base that is already switched on to the benefits of online shopping, such as convenience and wider product selection.
Australia’s citizens are not only embracing online shopping, but also cross-border shopping with over 80% of consumers having made an overseas purchase, which far exceeds the global average of 51.2%. According to Citigroup overseas purchasing accounts for between 35 and 40% of online sales in Australia, and a 2014 Pitney Bowes study found that 63% of Australians would be happy to shop internationally. This is supported by a 2014 report from Research and Markets that found Australian consumers to be one of the most active buyers from international retailers.
But it’s not just cross-border shopping that Australians are embracing…they are also embracing UK brands and retailers. Our consumer research carried out at the end of last year found that just under half (47%) of respondents favoured retailers in the UK when seeking an international brand. And some of the UK’s leading retailers such as House of Fraser and Debenhams say that Australia is their biggest online market outside the UK.
We have many things in common with our Australian cousins. Amongst other things we share a commonwealth bond built on a shared monarchy and standing shoulder to shoulder in two world wars, we also share a language and a love (if not intense rivalry) of rugby and cricket.
With so many things in common it is no wonder that millions of Australians have found a home in the UK and vice versa. There are currently around 1.2 million British expats living in Australia who are keen to purchase the British brands they already know and love rather than buy clothing and accessories from local Australian retailers.
A recent report by Citigroup highlighted that Australian consumers were bypassing locally-listed retailers in favour of overseas retailers when shopping online. Only half of Australia’s retail businesses have an online presence which means that there is a lack of availability of domestic fashion online. This is forcing increasingly fashion conscious digital consumers in Australia to shop cross-border and is subsequently putting demand on stylish fashion, such as that from Britain.
The Aussie consumer’s enthusiasm for cross-border shopping can also be explained by the high wholesale prices paid by local retailers and a loophole exempting foreign websites from charging a 10% general sales tax (GST) on purchases under AUS $1,000. The import environment is, in fact, so favourable that local retailers continue to campaign for a change to the current GST regulations claiming it puts them at considerable disadvantage. Consumers counter this by arguing that a lack of GST isn’t the primary motivator for purchases and that variety, convenience, price and access to global brands are the real drivers. Regardless of whether or not it is what motivates a purchase no-one could argue that the favourable import market has paid dividends for international retailers as, in 2013, Australian consumers made €3.11bn worth of purchases consisting of imports worth less than AUS $1,000.
The opportunities in Australia don’t show any signs of stopping anytime soon. By 2018, 8.4 million Australian shoppers are expected to make a cross-border purchase spending a not insignificant sum to the tune of USD $14.9bn with apparel and footwear the favoured shopping categories.
It seems that Australian shoppers love to do just that…shop. And if Australian retailers can’t deliver then Australian customers are clearly just as happy to get it cross-border, particularly from the UK.