Online sales growth takes seasonal December slip

Online retail growth took a dip in December compared to the previous month, according to new figures, but an economist has played down concerns that eCommerce spending is on the slide.

The NAB Online Retail Sales Index shows online retail sales in December grew 23% year-on-year. This is below that of November, which saw 27% growth in the same month.

However, start-ups have been reassured that this is due to a natural variation in the tide of online trade in December as shoppers up their purchasing in the month prior to ensure orders are delivered before Christmas.

Alan Oster, chief economist at NAB, says: “What happens is that, in history anyway, the online sales peak is not in December but in November.”

“When you look at the growth rate in December 2012 it is implicitly weaker than the year before. It is slightly disappointing. We don’t think that retail offline did that great in December either.”

The year-on-year growth trends across the 12 months of last year ranged between about 15% to 40% growth.

Oster expects these strong growth trends in online retail to continue this year.

“We think online retail is probably going to grow at about 20% per annum this year.”

There is a very interesting observation that occurs in the December online sales data on Christmas Day.

For most sectors of products, this is the worst performing day of the month. But for products including toys, games and hobbies, music, movies and books, there was a sudden spike in sales.

This can be attributed to the great increase in purchases of eBooks and digital music downloads, which were likely loaded onto consumer devices given as Christmas gifts.

Like their bricks-and-mortar counterparts, online stores also held post-Christmas sales. This will boost online sales figures in the New Year. However, the January figures are still being calculated.

“To compile the data takes a while,” explains Oster. “There are two million transactions a day, it’s a lot. So we don’t know yet the data for January.”

Oster’s advice to online retailers going forward is quite simple. “They should just keep going the way they are,” he says.

He also hints at the growth opportunities for traditional bricks-and-mortar stores setting up shop online.

“You used to have the bricks and the clicks. But we’re seeing now that a lot of the bricks [and mortar stores] have now got online channels and seeing growth.”

In 2012, Australia’s online retail spending totalled $12.8 billion, roughly 5.8% of the total size of traditional bricks and mortar retail market (this excluding cafés and restaurants for a like for like comparison).