Millennials are doing the most online shopping ($24.9 billion), followed by Gen X ($19.2 billion). Gen Z, which have less disposable income, spent $11.9 billion last year, while Baby Boomers spent $10.1 billion.
Older generations are getting more comfortable doing their shopping digitally: Boomers and “Builders” (born between 1925 and 1945) spent 17.6 per cent and 22.9 per cent more respectively than the year before.
We’re spending more on Amazon, Shein and Temu
In 2017, the biggest e-commerce platforms were eBay, Etsy, Redbubble and Catch.com.au. Fast-forward eight years, and all these platforms have lost market share, with Catch.com.au due to shut at the end of April.
Global juggernauts like Amazon and ultra-cheap fast-fashion retailers Shein and Temu are attracting more customers due to their bargain prices. Roy Morgan estimates about 4 million Australians have made at least one purchase from Temu, and 2 million have shopped at Shein at least once. Temu alone is expected to surpass $2 billion in sales.
US retail consultant and former Walmart executive Jordan Berke said Amazon’s entry into Australia more than seven years ago was a pivotal shift in driving up customer expectations.
“The Australian market has historically been a bit behind some peer markets. We think there’s about to be somewhat of a leapfrog moment where the market is going to start to rapidly adopt e-commerce,” Berke told this masthead.
“What we see globally is when marketplaces can deliver same day or faster, they end up driving a massive increase in adoption among consumers, and they really lead a change in how consumers view e-commerce as being a much more convenient option.”
Spending on fashion appeared to grow the slowest in 2024, as did hobbies and recreational goods, but much of this shopping may have shifted onto marketplaces instead.
We’re buying more – but basket sizes are shrinking
Basket sizes peaked during the pandemic but in 2024, each generation spent less per transaction. “Increased spending with online marketplaces (a category with one of the lowest basket sizes) drove the overall average basket size down,” said the Australia Post report.
On average, we shopped across 16 retailers on average to compare prices and nab the best deals.
Woolworths and Coles have been observing this increase in “cross-shopping” for more than a year as customers are willing to travel further and spread their grocery shop across multiple supermarkets to save money.
Nearly all (93 per cent) Australians said they were concerned about the rising cost of living in 2024, but Gen Zs, Millennials and Gen Xs were more concerned than Baby Boomers and Builders.
We’re waiting for sales
A quarter of households are more active during mega sales events than during the rest of the year, according to the report.
While retailers are commencing Black Friday sales earlier and driving up spending during November, Click Frenzy showed the greatest growth in online purchases (16.6 per cent).
“Shoppers will wait for the sale. It stretches the dollar further, and also they’re switching brands more often. Marketplaces are a great way to shop around and get a good deal,” said Starr.
Spending on necessities grew 4.6 per cent over 2024, outpacing discretionary spending, which lifted 3.3 per cent.
“Consumers had to prioritise spending on essential items – things like health, education, rent and insurance – because those categories had price rises,” said Commonwealth Bank senior economist Belinda Allen. “Because households drew into their savings during cost-of-living pressures, households might be a little cautious about lifting spending until they rebuild their saving buffers. It might be later in 2025 before spending looks more normal.”
It’s all about delivery
Speed matters: about eight in 10 shoppers said the delivery experience affected their online shopping satisfaction. More than half (56 per cent) named free shipping as their top priority when it comes to delivery experience.
It’s also key to keeping customers coming back: 46 per cent of shoppers around the world said free shipping was the No.1 factor that would motivate them to make a repeat purchase. Seven in 10 shoppers said they would want a retailer loyalty program to offer free shipping.
Most online shoppers expect their parcel to arrive in two to five days, with Millennials and Gen Xs having the highest expectations for quick delivery.
