A return to growth: Australians spent a record $69 billion online in 2024
While 2024 was a challenging year for many businesses, eCommerce growth was led by three key factors:
- Cost-of-living pressures sent people online in a search for value, so online spend grew faster than in-store. Online spending now makes up between 17.7%9 - 22.3%22 of all retail spend.
- Online Marketplaces alone drove 39% of online spend growth.8
- Older generations are driving online spend growth. Spend for Baby Boomers grew 17.6% and Builders 22.9% YoY.8
Online spend in 20248
Growth in online spend (YoY)8
How online spending stacks up over the years8
Millennials led eCommerce in 2024, spending nearly $25 billion
Baby Boomers and Builders are newer to online shopping. They're becoming more comfortable with it, with their 2024 online spending 23% higher than 2023.8
Gen Z
$11.9b Online spend 2024
5.5% Growth in online spend (YoY)
17.3% Share of online spend
Millennials
$24.9b Online spend 2024
10.6% Growth in online spend (YoY)
36.1% Share of online spend
Gen X
$19.2b Online spend 2024
14.0% Growth in online spend (YoY)
27.9% Share of online spend
Baby Boomers
$10.1b Online spend 2024
17.6% Growth in online spend (YoY)
14.7% Share of online spend
Builders
$2.7b Online spend 2024
22.9% Growth in online spend (YoY)
4.0% Share of online spend
In 2024, there was pressure on household income in the form of inflation, tax, interest and rent payments. That led to an environment where consumers made very deliberate choices in their spending behaviour.”
Your next step:
Prepare for a new generation of online shoppers (who are going to spend big)
The next generation to hit the shopping scene is Gen Alpha. As teenagers and children, they're currently directly influencing $8.5 trillion of worldwide spending;10 only 14% of parents say their Gen Alpha children aren't already browsing online for goods.3
By 2029, they'll be spending $8.6 trillion globally.10 Almost three-quarters of parents think their children will shop more online than in-store in the future.3
Businesses predict a shift in priorities to gain a larger portion of customer spend in the coming years. Micro and small businesses say they'll be sharpening their marketing, social media channels and overall customer experiences, while larger businesses identify loyalty programs and AI opportunities as the keys to higher sales.11
Beyond the dollars, almost 8 in 10 parents of Gen Alphas say their children influence them to make more environmentally aware purchasing decisions.3
Gen Alpha are more than the next generation of consumers. They are digital natives redefining retail and shaping the future of eCommerce - paying attention to the values and preferences of Gen Alpha will be vital for retailers looking to connect with consumers.”
Online Marketplaces led eCommerce growth in 2024. How did your category stack up?
Online Marketplaces drove $16 billion online spend in 2024, or 23% of all online spend.8 This is the highest of any category — and this share continues to grow each year.
For every $4 spent online, $1 is spent at Online Marketplaces.8
57% Low product prices
55%Variety of products and brands
49%Free shipping
How each category stacked up in 20248
A decade of shifts in the top spot for online spend23
How things change
Back in 2017, the major marketplaces in the Australian eCommerce landscape were eBay, Etsy, Redbubble and Catch. And they were booming: the sector grew by 75% that year. Now, the major players include Amazon and Temu.12
Gen Zs and Millennials plan to shop more from marketplaces in the next 5 years2
- Gen Z
- Millennials
- Gen X
- Baby Boomers
- Builders
Your next step:
Differentiate from marketplaces
“Marketplaces are now the preferred retail format for consumers worldwide: they have the greatest breadth of range, user experiences that are friction-free, personalised and increasingly fun, and they're currently focused on speed to match customer expectations,” says Jordan Berke, CEO of TOMORROW.
Jordan shares these tips:
“It's more important than ever to be clear on what your differentiation is to consumers, including having exclusive products that only you can offer.”
“Have a clearly defined target consumer, and show up for that consumer in a way that is unique and difficult to replicate.”
“Bring your customers into a physical environment for a unique, memorable experience.”
“Create loyalty-based relationships with consumers, rewarding them for shopping with you.”
“Don't compromise on convenience: you've got to be just as fast and just as easy as your peers.”
Basket sizes were down 2.1% in 2024 - here's how to encourage shoppers to buy now
Increased spending with Online Marketplaces (a category with one of the lowest basket sizes) drove the overall average basket size down.
Starshipit share their tips to increase basket sizes
1.
Implement free shipping thresholds.
2.
Create product bundles or 'frequently bought together' deals with discounts.
3.
Upsell and cross-sell by showing complementary items.
4.
Offer high-volume discounts.
5.
Implement reward and loyalty programs to build points or earn discounts.
Basket size by generation in 2024 and YOY change8
How things change
The average basket size for each generation peaked during the pandemic. Gen Zs, Millennials and Gen Xs had lower basket sizes in 2024 than in 2019, while those of Baby Boomers and Builders have increased.
Small business in 2024 can be summed up by one word: uncertainty. Customers were uncertain, and business owners were uncertain with rising costs of supplies and goods. But I feel hopeful that things will get better, because everyone who has been in small business retail for a while says there have been times like this before.”
Your next step:
Set up to make your future customers click 'buy now'
Ensure your shipping is as fast as possible.
“The next big wave is going to be speed; we expect that Australian consumers will see delivery times from leading platforms and omnichannel retailers reduce significantly over the next one to two years,” says Jordan Berke, Founder & CEO of TOMORROW.
Find ways to make the front-end experience more personalised and exciting.
Jordan says, “We will see omnichannel retailers get more sophisticated in how they connect their stores to the online channel for a more convenient and seamless digital experience.”
Lock in your customers with loyalty and paid subscriptions.
“I think more of the leading retailers in Australia will start to use innovative paid subscription models that make it more rewarding to keep shopping across their physical and digital channels,” says Jordan.
Essential spending grew 4.6% and discretionary spending grew 3.3% in 2024
Consumers had to prioritise spending on essential items - things like health, education, rent and insurance - because those categories had price rises.
They also made very deliberate choices about what brings them joy, and were willing to do without in some categories to get those preferred experiences. They are now feeling a little bit more optimistic about the economic outlook. They genuinely believe that interest rate hikes are behind us and interest rate cuts will be in the future. Interest rate relief is expected in 2025, which will help boost consumer spending. But because households drew into their savings during cost-of-living pressures, households might be a little cautious about lifting spending until they rebuild their saving buffers. It might be later in 2025 before spending looks more normal.”
In the first half of 2024, we were getting two orders a day. Then we were part of Gordon Ramsay's Food Stars, so suddenly we were one of the busiest websites in Australia.
Now we've got integrations, our store is talking to Australia Post, we had to make sure the UX was clear and automate the right emails to send out to customers. Australia Post was incredible at helping us deal with the calamity - the team at the Business Hub really supported us during the times it felt like we were almost falling over ourselves. They were answering questions we didn't even think to ask. Now we'd love to get to the point where everything is streamlined - we're getting the hang of it.”
PayPal is the most preferred online payment method - except for Gen Z, who prefer digital wallets
Interestingly, more than 4 in 10 Gen Zs and Millennials expect to use buy now pay later options more in the next 5 years.3
What do shoppers do if their preferred payment method isn't offered?2
Simply pay another way
- Gen Z
- Millennials
- Gen X
- Baby Boomers
- Builders
Abandon cart and shop elsewhere
- Gen Z
- Millennials
- Gen X
- Baby Boomers
- Builders
Your next step:
Remove friction points from the shopping experience
Unexpected costs arising at checkout
Be clear throughout the purchasing process, in order to set expectations early.
Delivery timeframe being longer than they'd like
Offer options including standard and Express delivery, and be sure to fulfil the order as soon as possible.
Preferred payment option not available
Offer a variety of popular payment options, including PayPal, digital wallets, credit card and buy now pay later.
Black Friday: a new record with $2.2 billion spent online in 2024
Australians spent $2.2 billion online during the 2024 Black Friday sales, up 10% YoY - and a new record. This compares with $2.9 billion spent in-store during the Black Friday event, 5% YoY.14
How things change
Black Friday tiptoed into Australia in the early 2010s, slowly gathering momentum throughout the decade. By 2018, it was embraced by businesses and shoppers - then the pandemic hit and Black Friday sales broke online shopping records.
Now, it's the biggest sale event on the calendar and has transformed the way Australians do their Christmas shopping, shifting the end of year peak from December to November.
The gap between November and December spending has grown since 2019 as consumers shift their spending earlier to take advantage of Black Friday/Cyber Monday sales.
In 2023, over $900 million more was spent online in November compared to December.8 However, the trend was reversed slightly in 2024, due to Cyber Monday occurring in December.
Online spend in November and December across the years23
With the increased pressures of cost of living, our target demographic is really holding out for these events.
Black Friday has become the biggest key shopping event in Australia, and if you don't have a striking enough offer that's different to what you've provided your customers throughout the year, I don't think you'll get noticed. Our Black Friday promotion contributes to 20% of our annual sales.”
Every generation says Black Friday is their favourite sale event because it's perfectly timed for Christmas shopping and offers the best deals of the year. Gen Xs particularly love it, with 53% of them shopping the event in 2024, compared with an average of 40% across the other generations.1
Your next step:
Innovate to expand your Black Friday success
“Lean in to real-time eventing. Instead of the standard calendar holiday events that we've seen for years, try to innovate by creating reasons for consumers to pay attention, visit and engage,” says Jordan Berke, Founder & CEO of TOMORROW. “Find topics that are relevant to your consumers in that moment and turn it into promotional excitement by tying your product, pricing and content into something that's trending in the moment.”
Three-quarters of businesses are concerned that frequent sale events are training shoppers to only buy goods that are on sale.5
Jordan says, “We have to embrace the reality that customers love the sport of a sale - but it's not right for every business. Retailers and brands that hope not to participate in as many promotions really need to double down on other attributes that matter, such as product uniqueness, differentiation, story and experience.”
