In the ever-evolving landscape of e-commerce, international giants like Shein, Temu, and Amazon are not just changing the game; they’re rewriting the rules. These behemoths of online retail are captivating Australian consumers with their unbeatable prices and low shipping costs, but their success story is a double-edged sword, with local businesses often paying the price.
For many Australians, especially those who appreciate convenience coupled with savings, the allure of these international retailers is undeniable. Whether it’s the latest fashion trends, home decor, or the newest tech gadgets, chances are you’ll find it on the digital shelves of Temu, Shein, or Amazon.
According to Roy Morgan research, Temu has swiftly captured almost one-fifth of the Aussie retail market, with 3.8 million people making at least one purchase within a year. Fast-fashion retailer Shein has also made its mark, with over two million Australians shopping on its platform. Meanwhile, Amazon continues to reign supreme with a staggering 7.9 million shoppers.
Market analysts predict that Amazon, currently holding about 10 per cent of the market, could see its share soar to at least 25 per cent by 2030. This rapid growth of international retailers has already claimed significant local casualties, with Wesfarmers’ Catch succumbing to the fierce competition.
Wesfarmers managing director Rob Scott acknowledged the challenge, stating, ‘The recent increase in competitive intensity in the Australian e-commerce sector has affected Catch’s financial performance and growth prospects.’ He added that other Wesfarmers brands might be better equipped to navigate the tough retail environment.
Merline McGregor, managing director of Pattern Australia, pointed out that the Australian market is relatively small and saturated with competition. She emphasised the need for businesses to carve out their niche and communicate meaningfully with consumers.
The rise of these international retailers can be attributed to their aggressive business models. Temu, which stands for ‘team up, price down’, gained attention with its Super Bowl advertising and quickly expanded its reach. Shein, owned by Chinese billionaire Sky Xu, sells directly to 150 countries, branding itself as a ‘global online fashion and lifestyle retailer’.
Amazon, on the other hand, has taken a more methodical approach, investing heavily in Australian infrastructure and services like Prime and same-day delivery in metro areas.
While Australian consumers enjoy the benefits of lower prices, local businesses—especially small ones—are feeling the pressure. Laura Hill, managing director of Sendle, pointed out that as cost-of-living pressures persist, more Australians are turning to offshore shopping, which is impacting the local economy and small businesses. A survey conducted late last year revealed that a quarter of small businesses feel these international sites have an unfair advantage, while 43% cite rising customer expectations for free shipping as adding additional costs.
In 2024, business insolvencies reached their highest level since Covid, with retail closures ranking third. ‘Catch was just one of many household names that couldn’t compete. Mosaic just announced more closures, and we saw Godfreys collapse—names we all recognise’ Hill said.
Despite the resilience of small businesses, competition from large foreign entities remains a significant challenge. ‘If Catch can’t compete, what hope does a small fashion retailer on a shopping strip have?’ Hill remarked, referring to the troubling trend of business insolvencies and retail closures.
Moreover, these online retailers are adept at leveraging human psychology to encourage spending. Deakin Business School’s Paul Harrison explained that tactics like creating a sense of scarcity exploit our innate biases and vulnerabilities, often leading to irrational consumer behaviour.
As the retail landscape shifts, it’s clear that global giants are changing the game. But what does this mean for local businesses and the future of shopping? How do you balance the convenience of international e-commerce with supporting local retailers? Share your thoughts in the comments below!
Also read: End of the road for Catch.com.au: What’s next for Aussie online retail?
“Are foreign retailers killing Australian businesses?”, Yes they are, with their undercutting of price and their extremely cheap transport costs, local businesses just can’t compete, even with better quality products and shorter delivery times !!!