Online retail sales weakens after strong growth: NAB

After two solid months of growth in August and September, online retail sales weakened in October, according to the latest NAB Online Retail Sales Index data.

Transactions went back -1.4 per cent over October, however year on year were up over seven percent despite slowing growth.

The largest sales category, homewares and appliances, recorded a significant monthly contraction in sales, and was a key contributor to the headline result. 

There was further improvement in sales growth for the second largest sales category, grocery and liquor.

This category was significantly impacted by the mid-year sales weakness, so much so, that its share of the online index has dropped from around 28% a year ago to about 26% now.

The smallest sales category, takeaway food, has been the most volatile in terms of sales growth; through this volatility, this category’s sales are up 80% when compared to the monthly sales of October 2018, and is almost 50% larger in the 12-months-to October 2019. 

Alan Oster said, Chief Economist, NAB said, "The three most populous states represent just over 80% of all online sales, slightly above their share of the population. Of these large sales states, Victoria leads in year-on-year growth, with ACT and NT leading the smaller sales regions."

"On average, online sales growth in Victoria has been higher than NSW over the past couple of years. Consequently, the gap in spend share between the two is narrowing."

"Representing about two-thirds of all online sales, metropolitan areas recorded a bigger contraction in sales growth in October, relative to regional areas."

"This generally followed across all states except WA, where regional sales growth contraction was larger than metro areas. In addition, regional online retail continued to grow in NSW and SA, indicating that the headline contraction for these states was driven by metro areas."

"By merchant location, international retailers (+1.0%) grew strongly in the month, while domestic (-1.6%) retailers contracted."

"While key domestic categories of grocery and liquor, and personal and recreational continued to grow, it was insufficient to offset weakness in the sales categories of homewares and appliances, media, fashion, and department stores."

"Fashion, games and toys, and small sales category takeaway food contributed to the continued growth for international merchants, he concluded.