The Q3 Digital Economy Index from Airwallex has revealed a significant drop in nationwide online spending, totalling $2.9 billion year-on-year (YoY).
This decline can be attributed to a spending downturn in the retail and e-commerce sector, as detailed in the quarterly report.
The Airwallex Digital Economy Index provides valuable insights into the digital economy, offering both YoY and quarter-on-quarter snapshots of the industry across different states and sectors. The latest findings underscore a general reduction in online spending across all sectors, ranging from a 1.29% decrease in the digital and technology sector to more substantial declines of nearly 7% for education, 7.9% for insurance and self-managed investments, and 8.02% for retail and e-commerce. Remarkably, the online travel sector has managed to buck this trend, reporting impressive growth of 12.75% YoY and 6.49% since Q2.
Across the various states, the common denominator leading to the decline in online spending has been retail spending, except for Queensland, where the travel sector played a pivotal role in driving an overall YoY increase.
Matt Sek, Vice President of Growth for Australia and New Zealand at Airwallex, anticipates an upswing in digital spending in Q4, coinciding with the peak sales season. Sek points out that Australians collectively have substantial savings, estimated at around $250-300 billion, and businesses should seize the opportunity to encourage consumer spending. He emphasizes that consumers have become more cautious amid the economic uncertainties of the past year, taking time to research and hunt for the best deals before making purchases.
Sek also notes that businesses have been reducing their own spending, resulting in a 1.29% YoY dip in digital and technology spending, primarily due to decreased online advertising. This trend highlights companies’ efforts to maximize the return on investment from their expenditures.
Sek concludes by highlighting the potential for a turnaround in spending and activity during the upcoming peak sales season in Q4. He suggests that businesses that thrive in the coming months will be those that can offer discounts and deals to entice consumers, emphasizing the need for savings and efficiency in their cost structures.
Airwallex is hosting a summit in Sydney, bringing together retailers and online businesses to discuss recent consumer spending trends and explore solutions to challenges expected during the upcoming peak sales season. The event, titled ‘Your Passport to Beyond Black Friday,’ will feature discussions, insights from industry experts, and a Peak Season Partner Marketplace where attendees can explore solutions and strategies to maximize their sales season performance.
Partners at the event include Afterpay, Wayflyer, Refundid, Elephant Room, BigCommerce, Marketplacer, and Shipbob. The summit aims to foster optimism among online businesses and encourage them to replicate the success and resilience witnessed in the travel sector.
The ‘Your Passport to Beyond Black Friday’ summit is scheduled for October 5th, starting at 4:30 pm, at Watersedge at The Rocks in Sydney. It promises to be an insightful and collaborative event for retail professionals seeking to navigate the upcoming peak sales season successfully.
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