eCommerce Market Insights - July 2023
Shoppers appear to be adopting a more cautious approach, local preference and seeking out a bargain.
According to the latest New Zealand Post ecommerce report for Q1 2023*, Kiwi spent over $1.36 billion on physical goods. This marks a significant 22% decrease in online spending compared to the same period last year. Looking back, it's worth noting that physical shopping was severely restricted a year ago due to the lockdown in late January. Consequently, Q1 2022 turned out to be the second-largest online shopping quarter in the past five years.
The economic landscape has undergone considerable changes over the past twelve months. Annual inflation has remained around 7% for the last three quarters, directly impacting consumers' budgets. As a result, shoppers are adopting a more cautious approach, reducing the frequency of their purchases, being more selective about what they’re adding to their shopping carts, and actively seeking out cheaper alternatives.
Despite the drop in online spending, Kiwi continue to show a preference for local retailers, with 72% of online expenditures in Q1 2023 going to NZ based businesses. This trend likely stems from the desire to support local economies, faster delivery, and the convenience of click-and-collect options.
Here at Trade Me, we saw a significant increase of over 50% in Q1 2023 (compared to Q1 2022) in the Travel, Events, and Activities category^. This can be attributed to consumers prioritising spending on experiences, entertainment, and travel. Additionally, purchases in the toys and models category also saw a notable increase.
Taking a broader look at the business landscape, we are observing signs of the property market stabilising as we approach the end of interest rate hikes. In May, our Property Price Index indicated a softening of price drops throughout New Zealand**. Furthermore, there are indications that the job market is slowing down.
In the current climate, shoppers are particularly drawn to bargains, and online retailers have ample opportunities to stimulate spending among both new and existing customers through upcoming sales and promotions. If you're interested in capitalising on these opportunities, feel free to get in touch with your account manager or reach out to us directly for more information on upcoming promotional options for your business.
^Trade Me internal site data based on Jan - March 2023 vs 2022