The head of eBay Australia has described the current environment as one of the worst periods in history for online retailing even as the auction site has hit new records for customer numbers.
eBay Australia's managing director Tim MacKinnon told The Age and The Sydney Morning Herald that June's meagre 0.5 per cent increase in the online retail sales index was the lowest he could remember.
eBay Australia and New Zealand managing director Tim MacKinnon says Australian retail is facing one of its most challenging periods.Credit: Wolter Peeters
"It's at the lowest point over my eight years at eBay, and one of the lowest in online history," he said.
"There's no doubt this is a challenging environment, there's a lot of competition, and there's a lot of focus on delivering value to consumers."
In the latest piece of bad news for the sector, the Australian Bureau of Statistics on Monday released data showing the seasonally adjusted estimate for inventories, which indicates the amount of merchandise a company has on hand, fell 0.9 per cent for the quarter.
In the wake of a poor June result for retail trade, economists said the inventory result showed retailers were adjusting stock levels to match weak demand.
Despite some "cautious optimism" from retail powerhouses such as JB Hi-Fi and Woolworths, analysts are predicting the pain to continue despite some fiscal and monetary stimulus.
Fresh retail trade figures for July will be released Tuesday, with Morgan Stanley analysts predicting a small 0.3 per cent increase, down slightly from 0.4 per cent in June.
Intense competition, but Amazon no worry
Mr MacKinnon said sellers on eBay were facing increasing competition, but noted that same competition didn't apply to eBay itself, despite pressure from players like Amazon and Kogan.
You can't change the rules of retail that great prices and great selection trump everything.
eBay Australia managing director Tim MacKinnon
eBay receives 11 million unique monthly visitors and has over 40,000 different small businesses selling on the platform. Mr MacKinnon said the company was in the strongest position it had even been.
"Two out of three Australians have bought something from eBay the last 12 months, which is the highest share of the population using eBay than any time in our history," he said. "We're clearly the market leader in online shopping."
The company is celebrating 20 years of operations locally, which Mr MacKinnon said had seen the company go through numerous changes, moving from a second-hand goods seller to a marketplace-focused business model.
Despite competitors such as Kogan constantly moving into new verticals like superannuation and credit cards, Mr MacKinnon said eBay wasn't planning to follow suit, predicting the future of online retail would likely be more of the same.
Technology advancements such as augmented reality and increased personalisation would likely play a limited role compared to the "fundamentals" of having low prices, cheap shipping and a broad selection.
"You can't change the rules of retail that great prices and great selection trump everything," he said. "I know that's a boring answer, but it's the most fundamental thing you need to do."