E-commerce the ‘saviour’ of business

Online retailing has helped Australian businesses weather the worst economic downturn since the Great Depression.

Australia Post chief executive Christine Holgate said the Deloitte research reaffirmed the unprecedented demand for online retail through COVID-19. Picture: John Feder

The nation’s burgeoning collection of online shopping sites, marketplaces, and other benefits of online retailing, such as click and collect and home deliveries, has helped Australian businesses weather the worst economic downturn since the Great Depression.

In many instances, the pivot to online helped many businesses limit the dent to their revenue and protected some jobs from going to the wall. This insulating feature of e-commerce was particularly acute for small businesses.

A new report from Deloitte commissioned by Australia Post on the role played by e-commerce during the COVID-19 pandemic has helped shine a light on the resilience­ and performance of the digital economy.

It comes as The Australian on Wednesday kicks off its two-day Australian E-commerce Summit 2020, where the sector will be reviewed and analysed by some of the nation’s leading chief executives and industry experts, with particular emphasis on the role it has played during the health crisis.

“One saviour during the crisis has been e-commerce services and online activity,’’ the Deloitte report says. “In the year to July, online spending rose by 72.5 per cent from the same month in 2019.

“Buying and selling through e-commerce platforms has provided consumers with a new way of ­purchasing during the crisis and helped keep businesses operating and staff employed.

“Purchasing decisions and the way consumers shop has also changed as a result of the crisis. Lack of access to shops, local lockdowns and safety and security are among the reasons consumers are shifting online. Businesses are providing their consumers with the ability to access core services and products in this constantly changing environment.”

The Deloitte report finds that, for goods-related businesses, e-commerce helped 61 per cent of businesses keep operating during the crisis by limiting revenue losses to 7 per cent — even though in-store revenues fell by 21 per cent.

The results are even more stark for small businesses, Deloitte says, where revenue losses would have been 30 per cent rather than 17 per cent were it not for e-commerce revenues. It says e-commerce also helped protect jobs during COVID-19, with 73 per cent of businesses keeping people employed during the crisis because of digital platforms.

Small agricultural business Logan Wines is typical of the ­cohort of regional firms now chasing a greater slice of their earnings online. Before the COVID-19 crisis, the majority of its sales were through its cellar door in the regional NSW wine town of Mudgee.

Owner and winemaker Leigh Sargent said the three to six months before the pandemic were hard because of bushfires and the impact of smoke damage, with cella­r door sales diving as a result.

“Our revenue from the cellar door had dropped 30-40 per cent and then the COVID-19 pandemic hit and there was a further decrease­ in sales because of restrictions on regional travel in the state,’’ Mr Sargent said.

“During the peak of the COVID-19 crisis, our online sales increased, however, the sales from the website didn’t cover the loss of sales from our cellar door.

“We do have a wine club with a loyal membership­ base and this helped to keep us operating.”

Deloitte says businesses that took action to drive e-commerce achieved the best results. Those who invested in e-commerce saw almost no fall in revenue while those who didn’t recorded an average fall of 12 per cent.

Australia Post has been in the front lines of this boom, with 82 per cent of the ­nation’s e-commerce by value delivered­ by Australia Post’s network, and the mail carrier facilitating an extra $4.2bn in e-commerce at the height of the crisis.

Australia Post chief executive Christine Holgate said the Deloitte research reaffirmed the unprecedented demand for online retail through COVID-19.

“We have seen e-commerce accelerate through this pandemic, with Australia Post providing a valuable lifeline to many businesses, as our people work tirelessly to help deliver the additional $4.2bn in online spending activity,” Ms Holgate said.

“Australians are embracing home delivery in record numbers and this analysis shows that over the next 12 months home delivery is expected to remain 25 per cent higher than pre-COVID levels”.

Deloitte says before the crisis, 53 per cent of purchases were made in person. “Today, it’s down to 42 per cent … the shift towards digital is here to stay, with an estimated 45 per cent of purchases set to be completed online in the future.”