Digital Economy Index reveals spending is flat, but online continues to grow

Australians’ online spending has dropped in the last year despite a growth in new online businesses and an increase in average turnover, according to a new report from fintech, Airwallex.

But it’s not all doom and gloom. Data from the inaugural Airwallex Digital Economy Index, shows NSW, Queensland and Tasmanian digital businesses have seen their annual turnover jump by up to 13 per cent, even as Aussies’ online spending dropped by more than $124 million nationwide.

NSW has benefited from strong growth across all online sectors but particularly in eCommerce, which contrasts to a national decline in spending for that category. Queensland and Tasmania benefitted from more online tourism spending. Victorian online businesses slumped from a lag in attracting the education dollar, while the SA and WA declines appear to be driven by lower tourism spending.

Growth into NSW and Queensland in particular, has come as more digital businesses relocate to those jurisdictions for more accessible talent and to be closer to other like-minded online businesses.

In the past 12 months, online spending on Australian education and travel businesses doubled and quadrupled respectively, as demand for services post-COVID ramped up. Aussie technology businesses have also seen turnover jump by more than 17 per cent.

A mixed picture

Airwallex Director of Strategy for ANZ, Amelia Hamer said the Index shows a mixed picture across the country as half of the states saw increases in online business turnover, while the other half saw declines.

Hamer said the Digital Economy Index showed, for the most part, that Australian businesses were holding up in the face of a negative economic outlook.

“Online businesses are holding more strongly than other parts of the economy but the data shows they aren’t immune from the economic headwinds the world is facing.

“The message from this data is if you’re going digital, you’re generally going strong. Especially compared to businesses that aren’t part of the digital economy, where we’ve seen online business growth outpace the latest ABS data on turnover in almost every category, except retail trade or eCommerce. “

In fact, Hamer suggests there is a silver lining to the Index findings. Online business turnover growth consistently outpaced the latest ABS data, although year-on-year digital turnover has dropped marginally (0.07 per cent).

Hamer said a drop in eCommerce was expected given strong market conditions and a return of offline shopping post-lockdown. Although a downward trend in Q4 of 2022 may indicate consumers are tightening their purse strings sue to rising inflation and interest rates.

“The figures indicate the post-COVID economic recovery is patchy – in full swing across some areas, while South Australia and WA, as well as Victoria, continue to struggle.

“Consumers are still drawn to spend with digital brands, but their reliance on them has waned post-lockdowns. Australian online businesses need to work harder to find opportunities to grow their income and revenue.

“Those smaller businesses that are still feeling the squeeze from the downturn need to keep focused on using the tools that will cut their costs, so they’re well positioned for when conditions pick up again.”

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