Economic Principles

Australia’s Online Shoppers and E-Commerce Sector Rising During Lockdown

The article titled, “Australia’s online shoppers and E-commerce sector rising during lockdown” is printed in the mirage news dated 02 September, 2020. This article is a viewpoint of a microeconomic expert from Deakin Business School. During the time of global recession due to the spread of Covid-19 pandemic, the price conscious online shoppers of Australia and the ecommerce operators have become optimistic. According to economists, the lockdown has led to transition from retail markets to online shopping. There is light amid the economic gloom of recession as due to the closure in the borders and state and territory lockdowns, online shopping is becoming more prominent.

The players in the ecommerce market in Australia can seize the opportunities by being more efficient during this time. It is seen that few best-known organisations have started during the time of recession. These companies are market disruption giants like Uber and Airbnb (Deakin Business School 2020). Thus, there is a possibility that the new business models could evolve in the dynamic ecommerce sector of Australia as well as in international markets. The online retail market was 10 per cent of the total retail sales of Australia before pandemic and it was expected that this percentage would rise to a level of 12 per cent by 2021. Surprisingly, this 12 per cent was achieved in the month of March, 2020. The number of households that shopped during the month of April was more than 5.2 million. It is projected by AusPost that the online retail sales would rise to 15 per cent at the end of the year 2020.

The increase in the demand of the online products as well as the rise in this sector in Australia is leading to low costs of production as well as low prices for the products. The low prices are attained due to economies of scale (Dunt and Harper 2002). The best example of this is takeaway food sector where the high demand and pressures from the restaurants has forced the delivery companies to give incentives and lower the commission rates to attract the customers. Also, the growing demand of online platforms have given incentives to the businesses to start the production and shipping services from their homes rather than outsourcing them. In particular, the major players of Australia like Coles and Woolsworth has adopted in-house production so that changes in demand is met.

The strength of the article very well explained the scenario and structure of ecommerce markets. It highlighted the supply side of the market. The low price for the online shoppers due to the high efficiency in production is very well explained. The light is also put on the principle of economies of scale due to large production and low cost. The weakness of the article is that it does not focused much on the demand side of the market. There is a possibility that high demand could lead to rise in the prices if the supply side is not responding quickly.

The rapid expansion in the ecommerce sector would benefit all the customers, workers, online platform providers and merchants (Salvatore 2008). Thus, the article is very much significant and accurate in this time of recession where buyers are moving from retail counter to online shopping. The numbers and percentages mentioned in the article provides more accuracy and clarity to it. The further implication is that more efficiency can be brought in this sector so that it can cater to the future high demand.

References for Analytical Media Assessment

Deakin Business School (2020). Mirage News. Retrieved September, 06, 2020, from https://www.miragenews.com/australia-s-online-shoppers-and-e-commerce-sector-rising-during-lockdown/

Dunt, E.S. & Harper, I.R. (2002). E–commerce and the Australian economy. Economic Record78(242), 327-342.

Salvatore, D., (2008). Microeconomics: theory and applications. OUP Catalogue.

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