New research reveals that 2 in 3 Australian online retailers increased their revenue in 2022 despite inflation and rate rises, and 9 in 10 plan to invest more in their business to protect against current economic pressures. These include expanding their product ranges, improving their customer experience online, and offering more delivery options.
The findings were derived from a survey of 200 online retailers by leading parcel delivery service CouriersPlease. Business owners and senior decision makers across different retailer sizes – micro (1-15 employees), small (16-50 employees), medium (51-200 employees) and large (more than 200 employees) – were asked whether their revenue increased in 2022, and what investment plans they had to help protect their revenue this year.
Nine in 10 online retailers have at least one business investment plan this year, to help protect their business from lower consumer spending.
How small business plan to stave off economic pressures
- 42 per cent will expand their product range
- 38 per cent will improve their E-Commerce stores
- 34 per cent will invest in marketing
- 31 per cent will expand into new markets
- 31 per cent will implement new technology such as customer service chatbots, automated fulfilment in their warehouses to improve their customer service
- 18 per cent will introduce more delivery options
- 15 per cent will create a better returns or exchange processes
Richard Thame, CEO at CouriersPlease, says the results are encouraging and indicate online retailers’ commitment to their business growth. “Online retailers are still enjoying the positive effects of the E-Commerce boom, and total revenue for the Australian market is forecasted to continue growing steadily year-on-year, with the market projected to reach US$35 billion by 2025.[1] But the survey shows that retailers are not naïve to economic fluctuations and are acting now to prepare for potential future challenges.”
Between the States, investment priorities vary. Online retailers in Queensland led the way with plans to invest in product range expansion, with just under half (48 per cent) of Queenslanders investing in this option, compared with only 20 per cent of West Australians.
The highest proportion of retailers planning to improve their E-Commerce store are in Victoria – at 40 per cent – compared with an equal 27 per cent of South Australian and West Australian retailers who plan the same.
The highest proportion of retailers planning to invest into new markets are in NSW – at 38 per cent – compared with just 13 per cent of West Australians.
Micro businesses are most likely to neglect the need to invest in their business to generate sales in a tough economic period, with one fifth (20 per cent) of this group admitting they will do nothing to hedge against an economic slowdown. This was followed by only 10 per cent of medium-sized businesses and 4 per cent of small businesses. Zero per cent of large businesses are willing to resign to fate in the event of economic turndown.
The proactive planning and resilience of these online retailers is exemplified by their positive results for 2022. Two-thirds (64 per cent) of online retailers reported increased revenue in the last calendar year, despite inflation and increasing interest rates throughout 2022. Just over a quarter (28 per cent) of respondents said their 2022 revenue remained the same as in 2021, and only 8 per cent of online retailers reported lower revenue in the last calendar year.
A closer look at the data reveals 69 per cent of online retailers based in NSW reported a revenue increase in 2022, closely followed by Victoria with 66 per cent, then Queensland with 58 per cent. Given online retailers in these States are already planning ways to tackle recessionary impacts for the year ahead, it is arguable that NSW, Victorian and Queenslander online retailers will report another positive revenue year for 2023.
Larger retailers were more likely to have increased their revenue in 2022 from 2021 levels, chosen by an impressive 91 per cent of large retailers, 68 per cent of medium-sized retailers, 62 per cent of small retailers and 53 per cent of micro retailers.
Similar proportions of micro, small and medium-sized retailers achieved the same levels of revenue in 2022 as in 2021, all between 30-32 per cent. This compares with just 5 per cent of large businesses whose revenue did not change in the same period.
Richard says: “The link between scaling and investing in different areas of the business, and a positive revenue report is clear. It makes sense that the online retailers that are forward-looking in their business development will help keep their customers engaged and interested in their products and services. By offering new products, easier pathways through their E-Commerce store, or a range of delivery options, retailers provide customers with a positive user experience that can help convert sales and increase revenue, even during more challenging economic times.”
The full survey results, including age and State breakdowns, can be found here: Couriers Please Economic Pressures