New Zealanders spent over $6 billion online last year

Tuesday, 16 May 2023

About 70% of the country's online shoppers still prefer shopping locally rather than with international retailers.

New Zealanders spent $6.07 billion online last year, NZ Post says.

Its eCommerce Market Sentiments showed online shopping turnover in New Zealand decreased by 4% in 2022. It now accounts for 11% of all retail spending.

The report, based on findings from a survey of 200 online retailers and 600 online shoppers, found that consumers had started to return to in-store shopping.

During the height of the Covid-19 pandemic, consumers were forced to shop online, and the habit stuck long after the doors to physical shops re-opened.

But NZ Post general manager business Chris Wong said consumers now increasingly wanted to buy in-store and were using retailers’ websites to make purchasing decisions.

“The figures shows that a retailer’s online store plays a key role in the research and decision-making process that leads to the physical in-store purchase,” said Wong.

“We are already seeing many physical retailers embracing a multichannel approach to sales, focusing on providing seamless customer experiences – whether the customer is shopping online from a mobile device or physically in-store.”

Wong said the challenging economic climate made having an online and physical presence a competitive advantage for retailers looking to make sales.

While online shopping transactions were down by almost 5% or by about $250 million in 2022, the in-store retail spend had increased by 7% to $51b.

Chris Wong says consumers are increasingly looking for value in their purchases.

The average online shopper made about 27 purchases online last year.

Wong said shoppers were after a bargain.

Almost 70% of shoppers surveyed said they had pulled back on online spending due to financial and economic reasons, while 32% said they were shopping online less because they could now go into shops without Covid-19 restrictions.

The immediate availability of product was cited as the main reason driving in-store purchases.

“It’s not surprising in the tough current conditions that discounts and special offers are what Kiwi shoppers (53%) value most,” said Wong.

While shoppers looked for value, loyalty discounts and bulk buying, retailers who had an ominchannel online and in-store offering, linked by the likes of QR codes or product location information in stores, were found to have performed better than retailers that operated an online-only business.

More than 65% of retail businesses surveyed said they believed 2023 would be more lucrative for their business.

NZ Post said online shopping was strong in the first quarter last year, followed by three quarters of “increasingly larger spending declines”.

Consumers are getting less bang for their buck with high inflation at an all-time high.

The survey found that 73% of the country’s online shoppers still preferred shopping locally versus with international retailers.

There were 53.9 million transactions conducted online last year, down 5% on 2021, but up 45% when compared to pre-pandemic levels.

ASB senior economist Kim Mundy said non-store commission-based sales, which captures online sales recorded in Stat NZ’s Retail Trade Survey, had been falling in recent months.

She said the most recent data showed a decline in annual sales both on a nominal and volume basis.

The value of sales was down 15% year-on-year, while on a volume basis (adjusted for inflation) sales were down 19% year-on-year.

“This fits with what we are seeing in the broader economy where consumption patterns are returning to pre-Covid norms, including a move away from a concentration on online shopping when other avenues were limited,” said Mundy.

‘’Sales more broadly also appear to be falling, or at least momentum is cooling, in real terms. But on a values basis, spending still looks relatively resilient. High inflation is helping to prop up values, but consumers are getting less bang for their buck. So, they may be spending similar amounts of money, but they are walking away with fewer goods/services.”

Overall retail sales declined 0.6% in the final quarter of 2022.

Mundy said economists expected retail sales would remain “soggy” for some time because of the high cost of living, rising mortgage interest rates, lower household savings and subdued consumer confidence.

In the year to June 30, NZ Post delivered a net profit of $102m, an increase of $70m on the previous year. Its parcel revenue increased by $137m in the year to $658m on the back of volume growth and postage price increases.

NZ Post delivered 93 million parcels in the year to June - up 8 million on the previous year.