Digital businesses in the Australian states of New South Wales, Queensland and Tasmanian have seen their annual turnover jump by up to 13 per cent, even as Australians’ online spending dropped by more than $124 million across the Asia Pacific nation.
The first Digital Economy Index released by payments fintech Airwallex shows Australians have spent $124.1 million less online than a year ago as people buy fewer clothes and products online, and redirect their spending into booking travel and signing up for education courses.
What were the findings of Airwallex’s research?
The Index estimates that online businesses in NSW have seen a 12.94% jump in turnover over the last year, while those in Queensland have jumped 6.14% and Tasmania by 1.9%. Victoria online businesses saw a 25% hit to turnover, SA was down by 13.6% and WA by 36%.
While the boom in New South Wales was driven by an increase in local e-commerce income, Queensland and Tasmania benefitted from more online tourism spending. Victorian online businesses slumped from a lag in attracting the education dollar, while the South Australia and Western Australia declines appear to be driven by lower tourism spending.
In the past 12 months, online spending on Australian education and travel businesses doubled and quadrupled respectively as the demand for services after the COVID pandemic ramped up. Aussie technology businesses have also seen turnover jump by more than 17 per cent.
Key highlights from the digital index
Online spending is on the decline. Aussies’ online spending has dropped by more than $124 million nationwide in the past year. However, three states have seen an increase in online spending as the Index estimates that online businesses in NSW have seen a 12.94% jump in turnover last year, while those in Queensland have jumped 6.14% and Tasmania by 1.9%.
On the other hand, three states have seen a sharp drop in online spending. This was evident as the online businesses in the state of Victoria saw a 25% hit to their turnover. Online businesses in South Australia had a turnover down by 13.6% whereas Western Australia declined by 36%.
Education and travel spending is on the up. Australians are buying fewer clothes and products through e-commerce, and redirecting their online spending into booking travel and signing up for education courses. Last year, online spending on Aussie education and travel businesses doubled and quadrupled respectively as demand for services post-COVID ramped up.
Furthermore, international demand for Aussie brands is dropping. There’s an alarm bell for some businesses that rely on international purchases, with the Index highlighting overseas sales dropped by 6% since last year, but domestic online consumption has made up for it. Local businesses are increasingly becoming Australians’ first choice for online shopping.
What are the thoughts of Airwallex on the index findings?
Airwallex Director of Strategy for ANZ, Amelia Hamer said the Digital Economy Index showed spending was flat with online businesses in Australia with a slight 0.07% annual decline, which highlighted they were holding up in the face of a negative economic outlook.
“Online businesses are holding more strongly than other parts of the economy but the data shows they aren’t immune from the economic headwinds the world is facing. The message from this data is if you’re going digital, you’re generally going strong,” Ms Hamer said.
She continued, “Especially compared to businesses that aren’t part of the digital economy where we’ve seen online business growth outpace the latest ABS data on turnover in almost every category, except retail or e-commerce. Figures indicate the post-COVID economic recovery is patchy, in full swing across some areas while SA, WA and Victoria struggle.”
“There’s an alarm bell for some businesses that rely on international purchases, with the Index highlighting they’ve dropped by 6 per cent since the previous year, but domestic online consumption has made up for it. Local businesses are increasingly becoming Australians’ first choice when it comes to online shopping,” Ms Hamer further commented.
“Consumers are still drawn to spend with digital brands, but their reliance on them has waned in the period after lockdowns. Australian online businesses need to work harder to find more opportunities to grow their income and revenue. Those smaller businesses that are still feeling the squeeze from the downturn need to keep focused on using the tools that will cut their costs, so they’re well positioned for when conditions pick up again,” Ms Hamer concluded.