Published on the 26/02/2025 | Written by Heather Wright

But local retailers holding on to lion’s share, for now…

Tough times have seen Kiwi and Australian shoppers turning to e-commerce – and in good news for retailers on one side of the Tasman, they’re continuing to push most of their spend to local e-tailers.

The NZ Post Annual eCommerce Review shows Kiwi shoppers spent NZ$6.1 billion online in 2024, with the lion’s share – 72 percent – remaining local.

“Our research indicates the number of first-time online shoppers also increased.”

The $6.1 billion is a five percent year-on-year increase and the second largest online spend recorded since monitoring began in 2019. Only 2021, when lockdowns were in full force and online shopping was the only shopping available for long periods of time, saw higher online spend logged, at  NZ$7.67 billion.

Online spend was up across nearly all sectors, with department, variety and miscellaneous retail the biggest mover (+33 percent), reflecting the disruptive impact of stores like Temu.

In Australia, the full-year figures aren’t yet out, but quarterly reports from Australia Post suggest it has also been a good year for online. In their July-September report, Australia Post recorded that online purchasing was up 2.5 percent in the 12 months to September.

This month it announced its research showed 72 percent of Australians took advantage of the Black Friday and Cyber Monday sales, fuelling a record-breaking surge in online shopping and parcel deliveries.

Increased demand for online shopping saw 7.6 million Australian households making an online purchase in November and December, up 2.4 percent on 2023. (New Zealand logged a nine percent year on year increase in online shopping in the October to December quarter.)

Gary Starr, Australia Post executive general manager parcel, post and eCommerce services, says it was a record peak period for Australia Post, with nearly 103 million parcels delivered across the two months – a 3.1 percent increase on 2023 and an all-time high.

“What fuelled this record period wasn’t just our regular online shoppers buying more,” Starr says. “Our research indicates the number of first-time online shoppers also increased, with over one-third of Aussies shopping online over the cyber weekend sales for the first time in 2024.”

Growing trust in eCommerce is influencing some of that behaviour with 49 percent of Australians reporting greater trust in online shopping this year.

When it comes to where we’re shopping, NZ Post’s figures show local e-tailers hanging on to their spend, claiming 72 percent of all online shopping – unchanged from 2023.

Nonetheless, NZ Post is sounding a warning, saying low cost overseas retailers like Temu and others who invested into marketing to attract Kiwi shoppers did have a big impact on where Kiwis shopped last year. Sales to offshore retailers grew faster (+16 percent) than domestic transactions (12 percent).

That’s international effect is seen especially in the ‘department, variety and miscellaneous retail stores’ category – New Zealand’s largest online retail sector, where 55 percent of spend went to offshore retailers, up from 47 percent a year ago.

Also seeing strong international transaction growth was the speciality food, groceries and liquor category, up nine percent, suggesting Kiwis aren’t keen to miss out on products they enjoy from overseas which aren’t available here. Overall the category growth remain static with local retailers missing out to the global purchases. (Clothing and footwear, health and beauty, homewares, appliances and electronics and recreation, entertainment, books and stationery all saw transaction growth off the back of domestic sales.)

Australian brands are also facing the challenge from global players.

Early this year Wesfarmers, whose brands include Kmart, Bunnings and Officeworks, announced it was winding up its Australian Catch online marketplace in the face of ‘increased competitive intensity’ as a surge in competition from the likes of Amazon, Temu and Shein put a damper on the Australian marketplace’s performance and growth prospects.

A Roy Morgan report last year said the rise of Temu and Shein poses a ‘real threat’ to local brands including department stores. Roy Morgan research in August showed 1.6 million Australians are shopping each month on Temu, with 1.1 million shipping on Shein, lured by ultra-cheap items. The research company estimated the companies had close to AU$3 billion in annual sales in the 12 months to June 2024.

Harvey Norman executive chair Gerry Harvey also took a swing at the incomers, calling for a government inquiry into the retails, which he labelled ‘pariahs’ killing off local businesses, paying no local tax, employing no Australians and not having to deal with the cost of regulations and rules which local retailers have to deal with.

Meanwhile, the increased online spend seen across Australia and New Zealand isn’t necessarily translating into bottom-line results, with shoppers spending less per transaction.

Instead, shoppers were spending less per transaction, choosing lower-cost alternatives and discounted products, with transaction volumes soaring to nearly eight million more than in 2023.

The decline in shopping basket size is especially true for overseas transactions where the average spend per transaction was down 10 percent, versus domestic retailers’ more modest six percent decline.

“These numbers suggest Kiwis are increasingly looking to overseas online retailers for lower priced products,” NZ Post notes.

Perhaps indicative of the strength of online was the ‘strong representation’ from leading online-only retailers in Australia’s annual ‘Most Trusted Retail Brand’ awards. While Bunnings again came out on top in the retail category of the awards, announced in December, Roy Morgan says brands including Australian beauty store Adore Beauty, Gumtree, Kogan and Booktopia made a strong showing with the likes of Aliexpress, Temu and Shein also in the mix.

Looking to the year ahead, NZ Post says last year’s catch phrase of ‘survive to 2025’ may have been slightly ambitious.

“The general consensus now from economists and other market commentators is that 2025 will show some improvement but is unlikely to deliver the big upturn shoppers and retailers have been waiting – and hoping – for.”

While more manageable general inflations, and drop in cash and mortgages rates are positive economic drivers, on the flip side is high unemployment, increasing council rates and rental costs and limited GDP growth expectations.

“Add to this the Trump uncertainty factor and two global conflicts, and it’s clear foreign pressures will continue to have a big say on what happens locally. Overall most commentators are forecasting household spending to remain weak and consumer confidence to be low until later in 2025.”

Online shopping, and the lure of lower prices, look set to continue in 2025.

“Retailers will need to show the same flexibility as shoppers, adjusting their approach to align with their own financial position and the changing needs of their customers.”