Tuesday, June 25, 2024

Australian online retailers brace for zero sales growth in 2023

New research reveals that 90% of Australian online retailers are expecting no sales revenue growth in 2023 as a litany of challenges including rampant inflation, surging interest rates and wage pressures weigh on consumer spending and demand.

The findings were derived from a survey of 200 online retailers and conducted by parcel delivery service CouriersPlease.The results highlight the ongoing pessimism across Australia with respondents flagging cashflow availability as their primary concern, followed by customer retention and overhead costs.

CouriersPlease CEO Richard Thame says the findings were a stark reminder of the challenges faced by online retailers of all sizes and regardless of jurisdiction, but that he wasn’t concerned, given the strength and resilience of online retailers.

“While the economic outlook is uncertain, I have no doubt that the e-commerce sector will overcome the challenging environment and emerge ever stronger on the other side. As one of Australia’s leading parcel delivery services, we ship and deliver every day from across a network of over 1200 franchisees and contractors. In 2022 we delivered more than 30 million parcels, an increase of two million when compared with 2021. Both years were fraught with their own economic challenges, but as our records show, online retailers managed to adapt and strategise to secure sales.”

State-based segmentation of the data provides unique insights and a valuable temperature check into the varying outlooks held across the country. When asked about sales revenue estimates, online retailers in Victoria were most pessimistic with 57% expecting sales revenue to decrease in 2023. This was followed by South Australian online retailers (55%) and Queensland online retailers (52%).

Conversely, West Australian online retailers were resoundingly optimistic with 60% of businesses surveyed not expecting to see any drop in sales revenue for the calendar year and 13% stating they expected to see sales revenue increase.

Regarding organisational size, the mood of smaller SMEs with 16-50 employees was most bleak (57%) followed by microbusiness with one-15 employees (50%), larger businesses with more than 200 employees (46%), and larger SMEs with 51- 200 employees (42%) saying they expect to see a drop in sales revenue this year. While cash flow availability was the dominant concern for microbusinesses (40%), SMEs employing 16-50 employees were most concerned about customer retention (37%) followed by staff shortages (35%).

For larger SMEs employing 51-200 people, the dominant concerns were equally weighted between cash flow availability and overhead costs (36%). This contrasted with larger businesses employing more than 200 employees who flagged their most acute concerns were equally weighted across staff shortages, staff retention, competitor activity, cashflow availability and overhead costs.

On a state-by-state basis, the findings also revealed the diverging views of online retailers regarding which challenges they were most concerned about. Whilst cash flow availability and customer retention were flagged equally as the biggest issues for West Australian businesses (47%), in South Australia only 28% raised these as major concerns, with staff retention and overhead costs taking precedence (46%). In New South Wales, customer retention was the most acute concern (35%) followed by cash flow availability (34%). Cash flow availability was also the number one concern in Victoria (34%) and Queensland (45%).

“The data reveals online retailers are facing a varying number of significant challenges and that there isn’t one universal issue affecting all businesses. Concerns such as cash flow constraints and the ultra-competitive labour market can’t be resolved overnight, but by keeping the customer experience at the heart of their business journey, such as providing convenient delivery options or offering loyalty incentives, online retailers can mitigate avoidable revenue loss,” Mr Thame said.

The full survey results, including age and State breakdowns, can be found at E-Commerce Under Pressure: A Survey of the Biggest Challenges Facing Online Retailers Today.

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