Ruth Williams August 3, 2011
AUSTRALIA'S fast-growing internet industry now contributes almost as much to the nation's economy as the embattled retail sector, and its value is already as big as that of the nation's iron ore exports.
According to a report to be released today by Deloitte Access Economics, commissioned by search engine giant Google Australia, the internet economy was worth about $50 billion in 2010, 3.6 per cent of gross domestic product, and was forecast to rise to $70 billion over the next five years.
Billed as the first attempt to measure and track the full contribution of Australia's digital economy, Deloitte's report calculates that the internet economy's $50 billion size was half of the powerhouse mining sector's contribution to GDP last year, and just $3 billion less than the retail sector's share.
Cathy Underhill, at her Victoria Market store, is having great success selling on the web. Photo: John Woudstra
It concludes that the total economic benefit of the internet to the wider Australian economy stands at about $80 billion - including productivity gains to households and businesses.
But it does not say how much of the growth in the internet economy is at the expense of other Australian industries.
By Deloitte's count, the internet economy now directly employs about 190,000 people in Australia, including 50,000 in e-commerce, 75,000 in ''advertising and enterprise sites'' and 40,000 in IT software and consulting. It says overall online activity has doubled in the past four years, with the number of internet searches - especially in banking and retail - growing ''particularly rapidly''.
In total, it expects growth in the internet economy of about 7 per cent a year over the next five years, more than double the forecast GDP growth of the broader economy.
And it says that growth in the digital economy will be hastened by Labor's $49.5 billion National Broadband Network and the expansion of wireless broadband.
The release of the report, titled The Connected Continent, comes in the wake of months of job losses, store closures and sales dives at so-called ''bricks and mortar'' retailers, whose woes have been blamed primarily on weakened consumer confidence, but also on growth in online shopping, exacerbated by the strong Australian dollar.
Figures released last month by the Australian Bureau of Statistics showed a worse than expected dive in retail sales of 0.6 per cent in May.
But a report from PricewaterhouseCoopers tipped online spending to grow at least twice as fast as the total retail sector over the next four years, with online spending by Australians to jump from $13.6 billion this year - 44 per cent of which would head overseas - to $21.7 billion in 2015.
Several Australian firms with online operations told The Age they were continuing to experience double-digit sales growth, despite the wider retailing gloom.
Melbourne-based online food company Aussie Farmers Direct, which claims it has about 100,000 customers nationwide, says its sales are growing about 30 per cent a year.
Its customers order foods including dairy, fruit and vegetables and fresh pasta online, which are then delivered to their homes by franchisees.
About 700 people make their living through Aussie Farmers Direct, according to its chief executive Braeden Lord. ''Five years ago, those jobs didn't exist,'' he says.
Get Wines Direct, a 10-year-old online retailer that also has a shopfront in Richmond, has grown its sales from about 100,000 bottles of wine in its first year to 5 million this year.
The company employs about 80 people and, according to its owner, Tony Sells, is still experiencing sales growth of about 25 per cent a year.
Its try-before-you-buy venue in Richmond accounts for just 10 per cent of the firm's sales. Many of its online customers, meanwhile, come from rural or regional areas, ''where they can't get the choice and variety''.
And for the more modest operation of McIvers Coffee and Tea Merchants, based in a tiny store in the Victoria Markets, the internet allows expansion without taking on a new lease.
While owner Catherine Underhill believes her website helps market the business, her ''bricks and mortar'' operation is ''infinitely more profitable''.
''That's one of the reasons I started it - without going out and finding another store, how do I expand the business without having another physical location?'' she says. ''I have a lot of customers from interstate and they were coming every time they came to town, so I saw [the website] as a service I could offer.''
