Surf, Shop, Save
28.02.2024 - 01:12
Our new report ‘Surf, Shop, Save’, commissioned by Amazon, explores how online channels have helped to lower the cost of living in Australia. Our report finds that online channels have helped reduce the cost of living pressures for Australians through cost-efficiency and competition effects. Since 2019, prices for online channels have been deflationary, while CPI has grown. When compared to each other, CPI has grown 10.5 percentage points more than prices for online channels for comparable categories of goods. During this time, online channels have also placed downward pressure on prices quoted by offline channels, helping reduce inflation by 0.7 percentage points during its peak in 2022. These effects saved Australian households nearly $3,500 on average since 2019.
Online channels help reduce cost of living pressures for Australians through cost-efficiency and competition effects
The retail sector consists of online and offline channels, with retailers using a mix of both to reach consumers, often within a single purchase journey.
Within this omnichannel retail sector, the cost-efficiency effect of online channels sees the cost savings from reduced handling and improved distribution being passed-on to consumers in the form of competitive prices. The competition effect of online channels sees reduced prices across the broader retail sector due to increased competition and increased consumer choice. This allows consumers to shop around for the best price.
Since 2019, prices for online channels have been deflationary, while CPI has grown
To estimate the cost-efficiency effect, we analysed a sample of over 60,000 distinct products from online channels, creating a time series of prices from 2019 to 2023. Using this data, we constructed an ‘Online Channels Index’ (OCI) and compared each category of the OCI (e.g., clothing and footwear) to the corresponding sub-group of the ABS’ Consumer Price Index (CPI).
Comparing the OCI to CPI, we find that the OCI has grown 10.5 percentage points less than CPI since 2019 for comparable categories of goods. This indicates that products that are available via online channels experience lower price growth than similar goods that are strictly sold through offline channels.
Annual inflation in Australia was 0.7 percentage points lower than it would otherwise have been thanks to the competition effect of online channels
Online retail channels have also placed downward pressure on prices quoted by offline channels. Without online channels, inflation in Australia would have been 0.7 percentage points higher during its peak in 2022.
Households have saved nearly $3,500 on average since 2019 thanks to online channels
Since 2019, Australian households have saved almost $3,500 on average due to online channels. Just over a quarter of this (26 per cent) was due to the cost-efficiency effect of online channels, and the remaining 74 per cent was due to the competition effect. The largest cost saving was from expenditure on recreation and culture.
Read the full report here.
Read our latest posts
Going global: Unlocking the growth potential of Australian pension capital
In partnership with IFM Investors and Super Members Council, Mandala has developed a landmark report highlighting the growing contribution that Australia’s retirement savings and pension system has on investments globally. Australia has one of the world’s largest pools of retirement savings with the country’s pension assets totalling approximately US$2.8 trillion. Australian pension funds are forecast to invest trillions of dollars in international markets by 2035 as they scour the globe to deliver the best investment returns for their millions of members, with the US coming out as the top investment destination. According to this new report, Australian pension fund investment in the US is expected to more than double over the next decade - from US$400 billion to over US$1 trillion.
23 Feb, 2025
The Zurich-Mandala Climate Risk Index: The impact of climate change on Australia's schools
For the first time, the Zurich-Mandala Climate Risk Index has been used to analyse the risk of climate change to 9,829 primary and secondary schools across Australia. The index uses IPCC climate modelling along with Zurich's proprietary climate impact assessments to understand the unique risks faced by individual schools. Extreme heat is projected to reduce writing, spelling, grammar & punctuation, and numeracy by over 7% in some parts of the country by 2060, with students in the Northern Territory and Queensland disproportionately impacted. Two-thirds of schools in Australia currently face high climate risk. This is set to increase to 84% of schools by 2060 under an intermediate climate scenario with 2 degrees Celsius of warming. Australian students are projected to experience 34 annual heatwave days by 2060.
2 Feb, 2025
Unlocking Growth: How Fintech Payment Solutions Empower Small Businesses
Small businesses have been among the biggest beneficiaries of the transition to fintech-powered modern payments systems, with the average benefits across all fintech solutions totalling $9 billion as a result of their adoption. Of the $9 billion in net benefits, $8 billion has come from increased revenues by adopting these services, and $1 billion from reduced costs. Notably, over 30% of businesses reported an increase in revenue of over 2.5% as a result of adopting a fintech payment solution.
31 Jan, 2025
Realising WA's green iron potential
Mandala has collaborated with the Chamber of Minerals and Energy Western Australia to launch a landmark report highlighting the immense decarbonisation and economic benefits of green iron produced in WA. Large-scale production of green iron in WA could reduce global emissions by 1.2 per cent by 2050 – effectively offsetting nearly every tonne of CO2 currently produced in Australia – while generating $74 billion in economic value and supporting 19,600 direct jobs. Green iron represents an opportunity for Western Australia to play a leading role decarbonising the emissions-intensive steelmaking process.
6 Jan, 2025