Online Spending on local sites strengthens

Spending on local online sites has strengthened, helping boost the country’s total online retail sales over the three months to April by 7 percent over the previous corresponding period.

Spending on New Zealand sites is continuing a recent strong run, seeing an 11 percent increase over the three months to April 30 compared to the previous corresponding period.

Continued strong growth in the food, clothing, electronics and department store categories was seen as the driving force.

“Growth in online spending on food is particularly strong and is emerging as a key reason for stronger growth rates at domestic sites versus international,” said Gary Baker, director of institutional research at Bank of New Zealand.

Baker said the country is continuing to see softer growth rates for purchases from offshore sites, which over the last three months were only 2 percent higher than in the same period the previous year.

“One influence is the NZ dollar, which is tracking around 7 percent lower versus the USD than it was a year ago, making offshore purchases more expensive for Kiwis,” Baker said.

“This will reduce spending if a fall in purchase volumes more than offsets the effect of paying higher prices.”

According to Baker, another influence on the softening growth rates from spending in offshore sites is the ongoing maturation of the online channel.

“In recent years we have seen online growth rates ease from double-digit levels and slowly trend down,” he said. “Online growth rates still exceed those of physical stores, but the gap is reducing.”

In some categories, however, purchases from offshore sites are continuing to grow very strongly, such as in computers and entertainment media.

Total online retail spending over the three months to April 30 was 7 percent higher than the previous corresponding period.

Annual online spending across the retail categories covered is running close to $4.6 billion, excluding GST.