Invest
Online retail is helping Australian households save as cost-of-living rises, new research shows
Invest
Online retail is helping Australian households save as cost-of-living rises, new research shows
In a landscape marked by rising cost-of-living pressures, online retail is emerging as a beacon of savings for Australian households. According to new research by Mandala Partners, the competition introduced by online retail channels is helping families save thousands of dollars annually, providing much-needed financial relief.
Online retail is helping Australian households save as cost-of-living rises, new research shows
In a landscape marked by rising cost-of-living pressures, online retail is emerging as a beacon of savings for Australian households. According to new research by Mandala Partners, the competition introduced by online retail channels is helping families save thousands of dollars annually, providing much-needed financial relief.
The second edition of the Surf, Shop, Save report has meticulously analysed the impact of online retail on inflation. By comparing prices of over 95,000 products sold through online channels with similar categories in the Consumer Price Index (CPI), the research highlights a significant trend: the Online Channel Index (OCI) has deflated by 6 percentage points since 2019, while the CPI for comparable products has surged by 8 percentage points during the same period.
Dr Adam Triggs, a report author and partner at Mandala, emphasised the transformative role of online retail. "As Australians continue to grapple with the burden of inflation, it’s clear that online retail is playing an increasing role in helping households to save money," he stated. Triggs elaborated on the findings, noting, "Between energy market volatility and a productivity slump, cost-of-living pressures have continued to bear down on Australians. But our Online Channel Index has actually deflated since 2019, while comparable products tracked by the CPI and sold offline have risen. Online channels have given consumers choice and price transparency, ultimately putting downward pressure on prices across the sector, and benefiting Australian households."
The research projects that by 2026, Australian households could save an estimated $1,414, equating to roughly six weeks' worth of groceries. This is particularly significant for lower-income households, which stand to save the most as a proportion of their income. Furthermore, the report highlights that the increased efficiency and competition from online retail have contributed to lowering annual inflation by 0.8 percentage points in the year leading up to March. This inflation-dampening effect suggests that interest rates could have been up to 0.55 percentage points higher, potentially saving homeowners up to $4,000 annually on the average $734,000 owner-occupier mortgage.
Matt Benham, Amazon Australia’s Country Manager, underscored the importance of these findings in the current economic climate. "We know cost-of-living pressures continue to be top of mind for Australians, and that’s why this research is so important – it flags a bright spot in the economy and for customers," Benham said. He added, "At Amazon, we’re constantly innovating to help bring the best prices to Aussie customers, be that through our Buy More & Save and Subscribe & Save programs or through our wide selection of millions of products, which allows our customers to find competitive prices."
The report also points to significant savings on fuel costs due to the rise of omnichannel shopping. By spreading four purchases across both online and offline channels, the average shopper could reduce fuel use by as much as 24 percent, further illustrating the multifaceted benefits of online retail.
Dr Triggs noted the broader implications of these trends for the retail sector. "The distinction between online and offline retail is increasingly obsolete. The increase in omnichannel retail, with stores selling both online and instore, means customers have more choice, can shop around and can even save on fuel costs. It also means that even small businesses can compete with bigger retailers, and so online channels are changing the Australian retail landscape for the better."
The Surf, Shop, Save report, commissioned by Amazon Australia, is set to be launched at Parliament House in Canberra. The findings underscore the growing importance of online retail in Australia’s competitive retail sector, offering a glimmer of hope amidst the economic challenges faced by many households. For those interested in delving deeper into the research, the full report is available on the Mandala Partners website.
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