We have updated our forecasts for online retail sales growth and penetration in Australia. FY25 was defined by strong online sales growth in marketplaces, food delivery and electronics. We have revised our long-term forecasts with higher penetration in online food as the supermarkets embrace food delivery aggregators and click & collect. We have slightly lowered our non-food forecasts. The emphasis remains on the profitability of online retailing for bricks & mortar retailers as well as the threat of Amazon to Australian retailers as they expand their footprint.

We have produced a chart pack showing the growth trends for online retail in Australia. It is in double-digit growth again after a pause in the 2023 calendar year. The growth is strongest for those with the biggest presence online – supermarkets, Amazon, Temu and Shein are all growing rapidly. While online is growing fast, it is happening with a stronger emphasis on profitability than five years ago. We expect retailers with a stronger online presence to have faster sales growth. However, the medium-term risk remains margin dilution for incumbent bricks & mortar retailers as the online sales may not be incremental.

This chart pack provides a range of insights about the online market in Australia including market size by category and penetration rates for a wide range of retailers. Three key insights from our analysis are – 1) Online retail growth is moderating, with the step down to single-digit growth impacting our forecasts for long-term share of sales. 2) Online retailers have shifted their focus to profitability, reducing the consumer appeal of online. 3) Amazon is continuing to take share from other marketplaces, now at 10% of all online retail in Australia.