CBA’s online retail report


CBA have released an excellent piece of research this morning that helps demystify foreign online spending by Australian consumers. The research is drawn from the bank’s credit card and merchant businesses. It’s a must read this one. Full report below.

A million customers can’t be wrong

There has been a dearth of reliable data on the impact of online retailing in Australia. Until now.

We have collated the online spending activities of CBA customers through the bank’s credit and debit card facilities. This analysis covers two data sets, a topdown estimate of market characteristics using our total card spend in excess of $50b; and a bottom-up analysis collated from active online cardholders targeting pure online retailers.

More than a million CBA cardholders are actively spending online for retail purposes. We have estimated the size of the online retail market and deconstructed the characteristics of these online consumers and trends across categories.

Online retail spending lower than some market estimates ($9.5b), but growing fast.

The key points from our top-down online retail analysis are:

  • We estimate retail online spending at $9.5b in 2010
  • Domestic spending accounts for $5.3b and international spending $4.2b
  • Online retail spending is estimated to represent 3.8% of total retail spending and 5.2% of discretionary retail spending.

At current levels, the foreign component of sales is roughly 1.7% of total retail sales. If online sales penetration increases to the level of the US, that would roughly double the total value going offshore over time.

Houses and Holes
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  1. 1.7% ! Is that all…what’s all the hoohaa about from the Big Boxers? Strikes me the downturn in the retail spend on the High St/Mall has little to do with a weak US$ and more to do with a weak household balance sheet.

  2. the categories where offshore spending has been highest are also those that traditionally have offered the best retails margins. The other thing that would really be sending shock waves through the traditional retail world is the demographics. The young are moving online and, presumably, will stay there.

    • Re the young – retailers beware. My 14 yr old goes online to buy as an automatic first reaction. Doesn’t even like the stores, well, apart from skate shops!

      • I can’t remember the last time in the last 12 months that I bought something for myself in a physical store. I find that I get new trends/brands, better sizing, more variety, no need to deal with shitty customer service (or none at all!). I get my item delivered to my door and did I mention it’s cheaper!

  3. I remember reading in recessions (yes, I think we are already well and truly in one despite what the backward looking and wholly unreliable statistics indicate!). Purchases of alcohol substantially increase.
    I don’t invest in the ‘poison’ due to my ethical investing inclinations.
    I’m just saying.

    • Svetlana, Babe… While I kinda agree with you on one level, its almost impossible to filter things like alcohol and tobacco out of Aussie life so why bother trying to be ethical. I’ve worked in welfare for many years and I can tell you that if we didn’t have lots of readily available alcohol we’d probably have even worse problems with other drugs anyway – people always want to get out of it no matter what. Alcohol addiction is rife in our society – its a moderately socially acceptable addiction (still) and it gives lots of people an outlet for their otherwise miserable lives, squeaking out an existance or stuck in a miserable marriage etc.

      As for on-line shopping, I’ve been doing my bit this year for wreaking the domestic economy by buying stuff direct from China. Its amazing how much money you can save by chopping out Westfield from the equation…