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ARTICLE PaymentsOctober 29, 2014

Why Australian online retailers are set for a “boom period”

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Australian-based online retailers are set to enter a “boom period” due to the weakening dollar, says a report by research company IBISWorld.

An IBISWorld report entitled Australian online retailers fight back argues that the depreciation of the dollar is allowing local retailers to reclaim some of the market share they have lost to overseas companies such as ASOS, The Book Depository and Amazon.

The IBISWorld report highlights the bookselling sector, which it says is experiencing a major turnaround on the back of the weakening dollar.

Growth in local online book retailing

Over the past five years, revenue for book and newspaper retailing has declined annually by 5.7 per cent, due to fierce competition from overseas companies.

The decline in the value of the Australian dollar in recent months, however, means that more consumers are opting to buy books from local online retailers. “Australian companies like Booktopia and Bookworld have expanded, and their economies of scale and declining per-unit costs have allowed them to pass savings on to customers,” states the report.

IBISWorld forecasts that the online book retailing industry will continue to benefit strongly from a combination of factors, including the depreciating dollar, the continued popularity of e-books and more readers opting to buy their books from online retailers.

“The industry is forecast to record strong growth of an annualised 14.5 per cent in the five years to 2018/19,” it says.

Australian online clothing retailers bounce back

The report also highlighted the online apparel retail sector, which is experiencing similar shifts to online book retailing.

Australian consumers were quick to embrace overseas clothing retailers, resulting in the local clothing retail sector declining by about 0.9 per cent annually in the five years to 2013/14.

Overseas retailers benefited from this trend, with the likes of the UK’s ASOS dominating online clothing sales over the past five years. IBISWorld points out that in 2013, ASOS was sending four jumbo jets of stock to Australia per week.

Locally based online clothes retailers are now fighting back. “Assisted by the lower Australian dollar, companies like THE ICONIC and SurfStitch have started to thrive, while ASOS has recently reported falling Australian sales,” says the report.

It forecasts that Australian online men’s clothing sales will grow by 9.7 per cent per annum over the five years to 2018/19. The online women’s clothing sales industry is forecast to record similar growth, though off a considerably higher base.

IBISWorld says online book retailers and clothing companies are just two sectors where local Australian online retailers are set to regain market share from overseas competition.

“Local operators have now established strong brands and economies of scale,” concludes the report. “They are providing a wider range of products to Australian consumers at more competitive prices and have been given a boost by the depreciating Australian dollar.

“Conditions are ideal for local online retailers, and all signs indicate that strong growth will continue.”  

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