Online retail

Online retail the key to boosting productivity

by Angus Jones

Small and medium businesses (SMBs) that adopt online retail channels earn 2.2 times more revenue and are 45 per cent more productive than their offline retail peers, according to new research by Mandala.

But despite the established benefits, just 12 per cent of all Australians SMBs currently use online retail channels such as third-party websites, apps or online marketplaces.

The new report, which will be launched in Canberra today, finds that if SMBs were to increase their adoption rate of online retail channels from 12 per cent to 15 per cent, Australia’s GDP would increase by $1.6 billion, equivalent to $154 per household each year.

The Online retail report also finds:

  • Online retail channels boost productivity, with SMBs utilising online channels 45 percent more productive than those that don’t, and generating approximately $86,000 more revenue per worker.
  • Online retail channels help more SMBs to sell to customers overseas. Only 2 per cent of those not using online channels exported overseas compared with 37 per cent for those that do use online channels.
  • The average Australian SMB that does not use online retail channels generates $1.7 million in revenue, a stark contrast with SMBs that do use online retail channels which generate 2.2 times more revenue ($3.6 million).

“Online retail channels have revolutionised the way small business can compete, but the exciting thing we see in this research is just how much potential we still have left,” said Mandala Partner Dr Adam Triggs.

“SMBs represent 66 per cent of GDP, so even a small improvement in their productivity has big effects. Only 12 per cent of SMBs use online retail channels, such as third-party websites, apps or online marketplaces. If this increased to just 15 per cent, we would see a permanent $1.6 billion increase in Australian GDP, equivalent to $154 per household each year.

“SMBs that use online retail channels are up to 45 per cent more productive than those that do not. They have twice the revenues and are much more likely to export. We know Australian consumers are now well and truly primed to make purchases online so we could achieve economy-wide productivity gains through the implementation of policy settings that encourage SMBs to adopt online retail channels.

“A lack of awareness is a big barrier. Too many businesses don’t know how these online channels work and what they can deliver for them. The same is true for other digital technologies where the biggest barriers are more often than not a lack of awareness and understanding.”

The full report

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