The outbreak of the COVID-19 pandemic has had both positive and negative impacts on businesses. For one thing, eCommerce in Australia is finally catching up as a result of the COVID-19 lockdowns.
When the Australian government advised residents to stay at home, they had nowhere to shop because stores were closed. So, they had to turn to online shopping. To meet the increase in demand, certain merchants stepped up their game. Others had to pivot massively to stay afloat.
In this post, we’ll show you what’s been happening behind the scenes for Australian businesses that shifted to eCommerce during the pandemic. We’ll also show you what that means in the larger scheme of things.
Ecommerce in Australia: Companies struggle to shift to eCommerce
It took less than four months for the COVID-19 pandemic to turn Australia’s supply chain and business processes upside-down.
This changed the way people shop, manufacturers produce, and suppliers deliver. Before this unfortunate event, ecommerce in Australia wasn’t as popular as in other countries. Business relationships and consumer behavior have also changed as a result. And some brick-and-mortar retailers are adapting to survive.
Mostly, they are switching to selling online exclusively or offering take-out and delivery instead of in-store purchases and dining.
By March, over 60% of all Australian businesses were directly affected by COVID-19. The percentage rose rapidly from 15% in February. Retailers and restaurants with annual turnovers in the $1-5 million range are the hardest hit. Businesses that cannot adapt to the increase in online demand are also struggling.
The Australian Bureau of Statistics reported in May that 69% of businesses expected an impact due to lower demand for goods and services through July. &2% of the business surveyed expected cash flow issues, too.
A Spike in Demand
Brick and mortar businesses tried to make the shift as more than a million more households switched to shopping online in April. But the sudden rise in online shopping posed a challenge for many of these businesses.
Notably, all the major Australian supermarket retailers had to stop accepting online orders.
They simply could not keep up with the massive spike in demand. There was not enough supply to keep items on the shelves. Poor communication between stock management, warehouses, and customers contributed to the nightmare.
Businesses Shifting to eCommerce in Australia
This difficulty made these business realize that they needed new digital technology to help them overcome the challenges.
Here’s a list of the companies that had to rapidly adapt to the new scenario:
Australian skincare company Aesop closed its doors and moved all transactions online. They had to add four warehouse sites to cope with online sales. Each of these locations required at least one or more pickups per day.
Yarra Valley gin distillery Four Pillars lost 60% of its business. Travel restrictions cut off the influx of tourist customers and the government implemented business safety guidelines. The distillery closed, but they adapted. They used excess alcohol and a gin by-product to make Heads, Tails & Clean Hands hand sanitizer.
Hospitality staff from the closed distillery, bars and restaurants were moved to fulfillment to take care of the orders that came flooding in. Four Pillars also produced an exclusive line of Take Care hand sanitizer for healthcare professionals.
Med-Con was the only producer of surgical masks in Australia until COVID-19 hit. They made only about 2 million masks per year because competition from overseas cut their market share to just 5%. In March, the Federal Government asked the company to produce at maximum.
Now they are making masks 24/7, and produce what equates to about 50 million masks a year. This is about eight times their previous output. To meet the government’s request, they opened a new manufacturing site and brought on new personnel with the help of the Defence Force.
Brisbane brand Beginning Boutique switched from making fashion clothing to PPE and other safety equipment. CEO and founder Sarah Timmerman discussed the shortage with her doctor sister and decided to provide these items to healthcare workers and consumers.
AU Medic Supply
AU Medic Supply was taking orders from all around the country for facemasks, gloves, and hand sanitizer within two weeks of that conversation. They faced logistical issues with larger shipments of hand sanitizer, but found shippers that could adapt while complying with dangerous goods legislation requirements.
Cashless Shopping is More popular Than Ever
Payment methods are also changing faster in Australia. Fewer people are paying in cash because they fear that it is contributing to the spread of the virus. Some retailers who still operate offline are shifting to contactless payment methods. Australia was predicted to become a cashless society by 2026, but that could come sooner. COVID-19 restrictions are speeding up the transition to cashless payments.
In April, PayPal Australia reported the highest number of online shopping transactions as well as largest total value of payments ever processed. This represents the strongest results in the company’s history. The company expects this to be a permanent shift that will make Australia a cashless society 5 years sooner than previously predicted.
Notably, new users included a 65% increase in the 50 years and older consumer segment. In addition, almost a third of the Australian population now have active PayPal accounts. Australian small businesses have enjoyed a 54% increase in sales during lockdown on PayPal alone.
PayPal conducted a study that shows that a third of everyone who shifted to grocery shopping online during the pandemic will not go back to shopping at local stores after the restrictions are lifted. Other research by PayPal shows that 66% more Australian consumers are ok with buying online if PayPal payments is available at checkout.
The boom in online shopping has invited an increase in fraudulent and scam activity. According to the Australian Competition and Consumer Commission (ACCC), there have been over 2,000 reported scams relating to $700,000 in losses since lockdowns began. This shocking number seems to be linked to more inexperienced online shoppers who are more easily duped.
PayPal buyer protection helps people avoid scams. Online shoppers can also follow standard safety tips to protect themselves:
- Do not believe anyone claiming to be a government agency or bank when they ask for your financial details over text or email.
- Do not contact any government agency or bank through channels other than what is on their official website.
- Do not click on embedded links – they may look legitimate but often take you to fake sites made to look like the real ones.
- Do not be tempted by urgent offers or threats to your account.
- Always check to see that the lock icon appears before the web address you are on and that it begins with https://, indicating that the site is secure.
- Always use a secure payment provider like PayPal, through which you can safely make credit card payments with an added layer of security as well as buyer protection.
When in doubt, always contact the company through their official website to find out what’s really going on. This also helps to prevent continued fraudulent or scam activity by making the company aware so they can take action.
Australian eCommerce Sales Increase
Established online retailers also experienced a surge in demand. Kogan.com, for example, saw record highs in orders and new customers. Kogan.com’s director of logistics & customer care Daniel Beahan says that he sees a permanent change in the way that Australians are shopping.
Forbes reports several companies that saw a marked increase in online purchases.
Most of the brands surveyed reported that sales increased on their websites and on marketplaces like Amazon.
These are some brands that exponentially increased their sales:
Brownes is one company that introduced a trial milk delivery service in its local area. Brownes is a West Australian dairy company that used to deliver this essential household staple when milkmen made regular milk deliveries to people’s doorsteps. The service was instantly popular, and sold out.
Water filter company Brita made over three times what they had forecast. They surpassed all the company’s sales objectives on Amazon in just the two months of April and May. They expect the same rate of growth for June and July.
Bare Blends, a natural protein powder company, saw their sales double on Amazon from February to March. This was in spite of a two-week period when they ran out of stock because demand was suddenly so high. They also reported two weeks of panic buying. Customers wanted to make sure they wouldn’t run out of their usual nutritional blends.
Bare Blends’ marketing director Chris Hale said that COVID-19 pushed eCommerce forward more than anything before. People are relying on eCommerce to get the things that they need.
He predicts that this shift to eCommerce will become a habit even after the crisis ends.
Another supplement brand, Swisse, said that customers were spending more time researching product information. Older customers most especially also sought product advice from online health care practitioners and customer service representatives. More customers in general wanted to know about proactive health management.
Online sales increased, but the company’s greatest insight is how important it is to build and maintain trust through two-way communication. Customers need to know how to use the products and how to purchase them online.
Contevo reports that 68% of Australian businesses experienced a decrease in revenue.
34% saw at least a 20% decrease in sales, and 46% reported a drop in site traffic. Most notably, 20% of retailers in Australia are seeing an increase in sales. This is in spite of issues with the supply chain – 54% reported supply disruptions.
The estimate is that grocery sales have increased 25% since the demand brought about by the pandemic. Previously, ecommerce in Australia, specifically online grocery orders only made up about 4%-5% of sales value.
Woolsworth and Coles
Woolsworth and Coles, the Australian supermarket giant, reported reaching full capacity for online orders in March. This is with Coles’s delivery window for Sydney and Melbourne closed for an entire week. To compensate, they offered a click-and-collect option. Both focused on increasing online sales and rebuilding delivery services to reach isolated and vulnerable Australians.
The most profitable eCommerce categories
Contevo also reports COVID-19 spending patterns across different markets. The following are now the three most profitable eCommerce product categories. The results are based on health-related developments and how that changes the items people choose to buy.
- Health and safety products –sales of face masks and hand sanitizers up over 300%.
- Shelf-stable goods – dollar growth for items like milk substitutes, dried beans, and fruit snacks up over 300%.
- Digital streaming – new and existing streaming services are getting more subscribers.
Although ecommerce in Australia took some time to take off, the pandemic forced business and customers alike to rapidly adapt to the new normality.
The businesses highlighted here show how a bit of ingenuity and fast action can spell the difference between closing doors forever and coming out even stronger than before. Some goods and services remain popular, but pivoting to meet customer demand is the key to business survival.
Ecommerce in Australia is now ramping up to become a cashless society, possibly within the next decade.
Related content: Australia’s Goods & Services Tax (GST) for Amazon Sellers