New research finds online retail is saving Australian households $1,414 a year and lowered annual inflation by 0.8 percentage points. Here is what the numbers say
Australian households are saving money through online retail, and that saving may be larger and more economically significant than most people realise. That is the central finding of new research by Mandala Partners, released on 27 May at Parliament House in Canberra. The report was commissioned by Amazon Australia.
The research, the second edition of the Surf, Shop, Save report, analysed the prices of more than 95,000 products sold through online channels and compared them with similar product categories tracked in the Consumer Price Index. The gap between the two measures tells a striking story. Since 2019, the Online Channel Index developed by Mandala Partners has deflated by 6 percentage points, while CPI for comparable product categories has risen by 8 percentage points over the same period. That is a 14 percentage point divergence between what Australians pay online and what they pay offline for similar products.
In practical terms, the research estimates that the competitive and efficiency effects of online channels will save Australian households $1,414 in 2026, roughly equivalent to six weeks of groceries. Lower-income households save the most as a share of their income.
Report author and Mandala partner Dr Adam Triggs said the findings point to online retail as an active force in keeping prices down. “As Australians continue to grapple with the burden of inflation, it’s clear that online retail is playing an increasing role in helping households to save money. Between energy market volatility and a productivity slump, cost-of-living pressures have continued to bear down on Australians. But our Online Channel Index has actually deflated since 2019, while comparable products tracked by the CPI and sold offline have risen. Online channels have given consumers choice and price transparency, ultimately putting downward pressure on prices across the sector, and benefiting Australian households.”
The inflation impact extends beyond household savings. The research found that greater efficiency and increased competition from online retail lowered annual inflation by 0.8 percentage points in the year to March. That deflationary effect carries a secondary consequence for mortgage holders. If online retail had not been dampening inflation, the research suggests interest rates could have been up to 0.55 percentage points higher, translating to up to $4,000 in annual savings on the average $734,000 owner-occupier mortgage.
The report also examined the environmental and cost implications of omnichannel shopping, finding that spreading four purchases across both online and offline channels, rather than shopping exclusively in store, could cut fuel use by as much as 24% for the average shopper.
Dr Triggs said the boundary between online and offline retail is becoming less relevant as the sector evolves. “The distinction between online and offline retail is increasingly obsolete. The increase in omnichannel retail, with stores selling both online and in-store, means customers have more choice, can shop around and can even save on fuel costs. It also means that even small businesses can compete with bigger retailers, and so online channels are changing the Australian retail landscape for the better.”
Amazon Australia Country Manager Matt Benham, whose company commissioned the research, said the findings reflect the role online retail plays in Australia’s competitive sector. “We know cost-of-living pressures continue to be top of mind for Australians, and that’s why this research is so important. It flags a bright spot in the economy and for customers.” He pointed to programs including Buy More and Save and Subscribe and Save as examples of Amazon’s approach to delivering competitive pricing.
The Surf, Shop, Save report was produced by Mandala Partners and commissioned by Amazon Australia. Amazon operates one of Australia’s largest online retail platforms and has a direct commercial interest in research demonstrating the consumer and economic benefits of online retail. The findings of the report are based on Mandala Partners’ independent analysis of more than 95,000 products and the firm’s own Online Channel Index methodology.
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