Digital business turnover in Australia took a $2.9 billion hit in the third quarter, down more than 5 per cent since the same time last year, with a significant drop retail transactions leading the way, according to global financial platform Airwallex.
However, consumers appear to be ramping up their travel spending with travel the only sector recording year-on-year growth, says the Airwallex Q3 Digital Economy Index.
The index estimates that Australians spent $2.9 million less on online transactions in the 12 months to the end of September, with all Australian states feeling the pinch except for Queensland.
In a breakdown of spending habits, the index reveals that online spending in the retail and e-commerce sector was down 8.02 per cent over the year, followed by a 7.9 per cent fall in financial and insurance products, a 6.9 per cent drop in education expenditure and a marginal 1.29 per cent drop in digital and technology products.
In comparison, online travel spending was up 12.75 per cent in the September quarter and 6.49 per cent higher than the June quarter this year.
The index found that retail spending led the decline in online transactions in each state, except for Queensland where a surge in online travel volumes drove an overall increase in spending of $428.2 million for the year.
The Digital Economy Index is based on estimated turnover for digital business determined through the analysis of data from Airwallex customers.
Despite the downturn in the latest quarter, Airwallex hasn’t ruled out a rebound nationally over the December quarter as consumers take advantage of the peak sales season.
“Australians have been spooked by the economic environment over the past 12 months but as things have stabilised, we can see they’re taking the time to do their research and hunt for the best bargains before they part with their hard-earned cash,” says Matt Sek, Airwallex’s Australia and New Zealand vice-president of growth.
"As business revenue has declined, companies have been pulling back on their own spending, with digital and technology spending dipping 1.29 per cent year-on-year driven by lower online advertising. It shows businesses are looking carefully to maximise the return on investment from each dollar they spend.
“The latest Digital Economy Index suggests Australians have been taking a collective big breath before the usual uptick in spending and activity we see in Q4 each year.”
Sek notes that official data shows Australians have collectively around $250 billion to $300 billion in their savings accounts.
“Savvy businesses will seek ways to maximise the upcoming sales season to get customers spending again,” he says.
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