E-commerce penetration in Australia has leapt to being four years ahead of the pre-COVID trend as Australian consumers increasingly shift their buying preferences to online.

A new CBRE report, Australia’s E-Commerce in the Post-Pandemic Era, highlights that despite some moderation post pandemic, the growth in e-commerce has had a lasting effect on the Australian market.

CBRE’s Australian Head of Industrial & Logistics Research Sass J-Baleh noted, “There are now more consumers buying online, with 82% of Australian households making an online purchase in 2022 versus 73% in 2018. These are now ‘sticky’ consumers, who did not previously purchase online but were forced to during the pandemic and have a continued preference for this style of shopping.

CBRE’s data highlights that Australia’s e-commerce sector increased by 113% between 2017 and 2022 to total $53 billion, with online sales accounting for 12.8% of the country’s total retail spend as at September 2023.

While the rate of growth in online retail trade has fallen from a record high of 15% in April 2022 at the peak of COVID lockdowns, to a three-year low of 12.6% in March 2023, the market has now stabilised at rates which remain well above the annual average growth of 2.5% over 2017-2021.

Ms J-Baleh noted, “Above trend e-commerce penetration rates have also been recorded in emerging e-commerce markets, such as Canada, Spain, Poland, Italy, Portugal and Turkey. However, we have also observed this in the US, where the e-commerce penetration rate is three years ahead of its pre-COVID trend.”

The Home & Garden sector led online sales in Australia in 2022, bolstered by a 21% hike in Pet Product sales, with Food & Liquor in second place.

On a state-by-state basis, Victoria is leading in the Australian e-commerce stakes with a current penetration rate of 15%.

“Nationally, we expect that e-commerce penetration will continue to grow to a forecast share of 15% by 2027. In tandem, 1.1 million square metres of additional e-commerce dedicated logistics space will be required in Australia over the next four years to support the growth of internet sales,” Ms J-Baleh said.

“This will require us to unlock alternative space or to intensify the use of available space to meet demand, something that’s already occurring in the Sydney market with the development of multi-storey warehouses.”

Location, location, location will be a key focus for the industry, as consumer delivery expectations continue to rise.

CBRE’s South Sydney Managing Director Nathan Egan noted, “Fast delivery requires goods to be stored close to consumers in urban infill locations. However, warehouse space is becoming limited in urban areas and land is becoming more expensive. One solution to limited space in urban areas will be the development of multi-storey warehouses to make use of the limited land available, whilst also being more cost-effective.”

Circa 850,000sqm of multi-storey floorspace is forecast to be delivered between 2023 and 2027, across 20 projects in Sydney, where rents are the most expensive in the country. Almost 30% of this total floorspace is currently under construction or has development approval.

Click here to view and download the report.