Australia e-shoppers elude retail data crunchers

MELBOURNE,  AUSTRALIA: Australia's official economic data is struggling to capture growing online sales as the country's consumers belatedly embrace e-commerce, suggesting that soft retail trade data is missing part of a fast-growing market.

If billions of dollars of online sales are being under-recorded, it could mean consumption is stronger than official data shows, adding to the case for a further increase in interest rates to throttle inflationary pressures.

"Many Australians are now shopping for certain products online that they would have traditionally gone into the stores for. Plus, you can buy products that are simply not available in Australia," said eBay Australia spokesman Daniel Feiler.

Consumers will spend up to A$27 billion ($24.5 billion) on online shopping this year, which could help explain why retail sales data have appeared subdued, despite robust income growth.

Data on Tuesday showed retail sales, which account for around a quarter of Australia's economy, rose a scant 0.2 percent in June, below forecasts, to A$20.2 billion. The statistics office follows Internet sales by big domestic retailers such as Coles and Kmart, owned by Wesfarmers  and electronics chain JB Hi-Fi. But it doesn't track smaller online stores or overseas sites such as Amazon.

"There is a good chance it is missing some of the spending, because of lags in catching up with shifts in spending patterns and the creation of new businesses," said Commonwealth Bank of Australia chief economist Michael Blythe.

Feiler said eBay's research found the number of Australians buying goods online from offshore retailers surged 60 percent in April from a year earlier, due largely to a firmer Aussie dollar.

"When the dollar is strong, a lot of Australians buy from offshore sellers because of the bargains they can get," he said.

The Aussie dollar AUD= traded as high as 93 U.S. cents in April, up from around 72 cents in April 2009.

Slow Learner

Australia, isolated geographically and with high shipping costs, has proved tricky for foreign bricks-and-mortar retailers to penetrate. That has fostered fat margins for local stores.

But the weak economy last year encouraged shoppers to compare prices, and more Australians now buy gadgets, books, clothes and other goods online from local and international retailers.

Independent research group Forrester Research estimates that e-commerce will be worth some A$27 billion in 2010, of which 25 percent will go to offshore retailers.

Another research firm, IBISWorld, estimates online sales will rise 4.5 percent to A$22 billion this fiscal year.

"Growth is largely due to increased access with broadband penetration, and confidence in making online purchases," said IBISWorld retail analyst Naren Sivasailam.

Australians had been slow to embrace Internet shopping. That is in stark contrast to the United States, where a long history of mail-order shopping is cited as one reason consumers have flocked to the Internet, which now accounts for some 5-10 percent of retail turnover.

Feiler also said that well over half of eBay's Australian sales are now fixed-price sales of new goods from online sellers, rather than auctions of second-hand items.

Of eBay's top Australian sellers in 2009, about 2,000 had turnover between A$100,000 and A$10 million.

The Australian Bureau of Statistics surveys businesses registered with tax authorities, so there could be a delay in new Internet start-ups entering into the sample group for its survey.

The ABS is looking into whether it needs to take steps to include more non-traditional retail data in its sample.

"There could be a fair amount of household consumption not being captured," Katlean Pussell, assistant director of retail trade at the Australian Bureau of Statistics, told Reuters.

The Reserve Bank of Australia has far outpaced the developed world by lifting its cash rate 150 basis points since October as Australia benefits from Chinese demand for its commodity exports, a stable banking system and rapid population growth.

But it held interest rates steady for a third straight month on Tuesday, and moderating inflation at home combined with economic uncertainties abroad could allow it to pause for some time to come.