Australians’ love for online entertainment, e-commerce and payments has created one of the world’s most attractive markets for digital platforms. Levels of engagement, expenditure and profitability have all risen in the past year. The result: Australia has cemented itself as a crucial market for expanding e-commerce operations.
International surveys reveal that Australia is now a top e-commerce performer. Euromonitor ranks Australia as the world’s 4th most attractive online consumer market, just behind South Korea, United Kingdom and the United States (Source: Digital Landscape in Australia, April 2021, Euromonitor International, accessed July 2021, Paywall).
Notably, Euromonitor puts Australia first for ‘digitally connected commerce’. This top-spot ranking includes analysis of the ‘market environment’ and ‘take up of e-commerce’. It also measures penetration rates for ‘digital commerce infrastructure’ including payments and mobile device ownership.
COVID drives appetite for online entertainment
Pandemic lockdowns have accelerated the phenomenal growth in demand for online streaming and entertainment in Australia. Total entertainment media consumption is likely to top A$50.6 billion in 2024 (Source: Australian Media and Entertainment Outlook 2020–2024, PwC, accessed July 2021), according to PwC.
Australians are already one of the biggest spenders per capita on video games and e-sports. Total spending reached A$3.4 billion in 2020 and PwC forecasts that spending will reach A$4.4 billion by 2024. This is a very broad market. According to the PwC report, 74.5% of internet users ages 16 to 64 say they play video games.
PwC also says that streaming is a major business:
- Broadcast video on demand (BVOD) is set grow by 12.9% per year to 2024, with revenue expected to reach A$501 million in 2024.
- Streaming video on demand (SVOD) is set to grow by 16.2% per year to 2024, with revenue expected to reach A$2.3 billion.
- Digitally distributed music is set to grow by 10.3% per year to 2024 and achieve a revenue of $1.4 billion.
According to global agency, We Are Social, the average Australian spends 3 hours 30 minutes per day engaged in digital television and streaming (Source: Digital 2021 Australia, We Are Social, accessed July 2021).
Australians are big spenders on e-commerce
E-commerce has become the default choice for many purchases such as food delivery in Australia. According to software company, Cheetah Digital, over 61% of Australian consumers say that e-commerce is the preferred method for buying everything they wanted to buy. (Source: Australian Digital Consumer Trends Index 2021, Cheetah Digital, accessed July 2021).
Australians generated A$43.1 billion in online sales in 2020, according to the Euromonitor report. Australians have indicated they are not only more likely to spend more online, but purchase more per transaction. However Cheetah Digital notes Australians are demanding and sophisticated online consumers who want an individualised and seamless customer experience.
Purchasing habits will continue to evolve
Australian e-commerce grew 22.3% in 2020, making it a US$27.28 billion consumer goods marketplaces, according to the Euromonitor report. E-commerce sales grew strongly in 2020 in multiple sectors:
- fashion and beauty e-commerce sales grew 20.6%
- food and personal care sales grew 30.4%
- digital music sales grew 25.9%
- video games sales grew 24%.
Profitability is driven by improvements in digital infrastructure and delivery logistics. The latter has reduced costs for companies, lowering shopping times and improving the customer experience. This is encouraging global tech firms to expand in Australia, and establish a physical presence.
Change will be continuous. Australians are already very comfortable with digital payments and online purchasing. The recent roll-out of 5G broadband networks provides further opportunities to introduce artificial intelligence and augmented reality platforms that revolutionise consumer experiences.
Australia leads the way in payments adoption
A supportive regulatory and financial system has helped Australians become leaders in the adoption of new payments technology. Contactless ‘tap and go’ payments were introduced in 2006.
The pandemic has further accelerated the move to cashless payments, according to the Reserve Bank of Australia (RBA) (Source: Consumer Behaviour in Australia, September 2020, RBA, accessed July 2021). Some analysts forecast that Australian payments will be almost cashless by 2024.
According to the Commonwealth Bank of Australia (CBA), 8.3 million Australians made digital-enabled payments in 2020 (Source: CBA predicts digital wallets set to become the most popular contactless way to pay, CBA, accessed July 2021). CBA also reports that monthly digital wallet transactions more than doubled from A$1.0 billion to A$2.1 billion from March 2020 to March 2021.
Payment systems: new models – new players
New players are also disrupting the market for payment services. Leading Australian ‘buy-now-pay-later’ digital payment platforms like Afterpay have fundamentally changed the retail experience. They are now disrupting the payments space traditionally held by credit cards.
For example, Afterpay is a pay-by-instalment service that enables customers to buy products on a modified, ‘buy now, receive now, pay later’ basis. The company launched in 2015 and has already notched up its 10 millionth customer. And the success of this billion-dollar Australian start up showcases the creativity and global ambitions of Australian fintech.
Meanwhile, traditional ‘plastic’ is hurting. The RBA reports that 400,000 credit card accounts were closed in Australia in 2020, due in part to the adoption of platforms like Afterpay. (Source: Consumer Behaviour in Australia, March 2020, RBA, accessed July 2021).
Join us at FINTECH21 to learn more
Nov 3-4, 2021
Free tickets are available with registration