Online retailers brace for zero sales growth in 2023

Slowing consumer confidence, lowered discretionary spending, cash flow hiccups and rampant inflation is wreaking havoc on Australia’s online retail sector, with nine out of ten businesses saying they expect zero sales growth in 2023.

New research from parcel delivery service CouriersPlease has revealed the extent of the issue, with retailers nationwide feeling pessimistic as wage pressures, increased super contributions and slowing consumer spending kick in.

Couriers Please CEO Richard Thane says that while the results highlight the ongoing challenges facing the eCommerce sector, he believes retailers’ resilience will prevail.

“While the economic outlook is uncertain, I have no doubt that the eCommerce sector will overcome the challenging environment and emerge ever stronger on the other side,” Thane said.

“In 2022 we delivered more than 30 million parcels, an increase of two million when compared with 2021. Both years were fraught with their own economic challenges, but as our records show, online retailers managed to adapt and strategise to secure sales.”

Retail temperature check

Retailers’ sentiment varied depending on location, with Victorian retailers proving most pessimistic. While areas of concern were also different dependent on state.

When asked about sales revenue estimates, more than half of online retailers in Victoria (57 per cent) expected sales to decrease in 2023. This was followed by South Australian online retailers (55 per cent) and Queensland online retailers (52 per cent).

At the other end of the spectrum, West Australian online retailers were decidedly optimistic, with 60 per cent of businesses surveyed not expecting to see any drop in sales revenue for the calendar year, and 13 per cent stating they expected to see sales revenue increase.

Smaller businesses most impacted by retail slump

The findings from the survey reveal that different-sized retailers are facing different challenges, with the mood of small businesses the most bleak.

Cash flow availability was the dominant concern for micro-businesses (40 per cent) while small businesses employing 16-50 employees were most concerned about customer retention (37 per cent), followed by staff shortages (35 per cent). Larger SMEs employing 51-200 people were also primarily concerned with cash flow availability (36 per cent), and larger organisations employing 200 or more were equally concerned about cash flow, competitor activity, staff retention and staff shortages (27 per cent).

Thane suggests the findings show there is no one universal concern for Aussie businesses.

“The data reveals online retailers are facing a varying number of significant challenges. Concerns such as cash flow constraints and the ultra-competitive labour market can’t be resolved overnight, but by keeping the customer experience at the heart of their business journey, online retailers can mitigate avoidable revenue loss.”

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