Competition from online retail channels is saving Australian households thousands of dollars, according to new research by Mandala Partners.
The second edition of the ‘Surf, Shop, Save’ report analysed the impact of online retail channels on inflation, by comparing the prices of more than 95,000 products sold on online channels with similar product categories in the consumer price index (CPI).
The research finds that the online channel index (OCI) has deflated six percentage points since 2019, while CPI for comparable categories of products has risen by eight percentage points over the same period. The competitive and efficiency effects of online channels have meant that Australian households are expected to save $1414 in 2026, the research says – roughly six-weeks’ worth of groceries, with lower-income households saving most as a share of income.
The research also found that greater efficiency and increased competition from online retail lowered annual inflation by 0.8 percentage points in the year to March. The inflation-dampening effect means interest rates could have been up to 0.55 percentage points higher, translating to up to $4000 in annual savings on the average $734,000 owner-occupier mortgage.
Saving on fuel
The report, commissioned by Amazon Australia, found that not only are Australians saving as a result of online shopping generally, but they are also saving on fuel costs, too.
The rise of omnichannel shopping could help cut fuel use by as much as 24% for the average shopper spreading four purchases across offline and online channels, instead of shopping exclusively in store.
Greater choice and price transparency
Report author and Mandala partner Dr Adam Triggs says that it’s clear that competition in retail is driving greater consumer choice and price transparency.
“As Australians continue to grapple with the burden of inflation, it’s clear that online retail is playing an increasing role in helping households to save money,” he says.
“Between energy market volatility and a productivity slump, cost-of-living pressures have continued to bear down on Australians.
“But our OCI has actually deflated since 2019, while comparable products tracked by the CPI and sold offline have risen. Online channels have given consumers choice and price transparency, ultimately putting downward pressure on prices across the sector, and benefiting Australian households.
“The distinction between online and offline retail is increasingly obsolete. The increase in omnichannel retail, with stores selling both online and instore, means customers have more choice, can shop around and can even save on fuel costs.
“It also means that even small businesses can compete with bigger retailers, and so online channels are changing the Australian retail landscape for the better.”
The role of online retail
Amazon Australia Country Manager Matt Benham says the research shows the increasingly important role online retail plays in Australia’s competitive retail sector.
“We know cost-of-living pressures continue to be top of mind for Australians, and that’s why this research is so important – it flags a bright spot in the economy and for customers,” he says.
“At Amazon, we’re constantly innovating to help bring the best prices to Aussie customers, be that through our Buy More & Save and Subscribe & Save programs or through our wide selection of millions of products, which allows our customers to find competitive prices.
“As the research shows, providing customers with choice and transparency in price is a benefit, both to the Australian economy, and to helping Australian households save hard-earned dollars.”
The ‘Surf, Shop, Save’ report is being launched today (27 May) at Parliament House in Canberra.
