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Slow December, January wipe out strong online sales growth in November

Online retail sales have fallen for two months straight, wiping out the gains from a bumper November, according to the latest Online Retail Sales Index from NAB.

The index shows e-commerce sales contracted -0.5 per cent from December in the month of January, on a seasonally adjusted basis. Though still negative, it wasn’t as steep a decline as that seen in December, when online sales were down -1.9 per cent from November, when Cyber Week sales drove strong growth.

The dip in January and December combined means there has been virtually no growth for three months straight, though sales are still growing in year on year terms, with the index up 7.5 per cent year on year in January.

Year-on-year growth was positive for seven of the eight industry groupings in January. Department and variety stores remained the fastest growing category, up 29.6 per cent year on year, mainly due to continued growth of new entrants into the Australian market.

This was followed by games and toys, up 20.1 per cent, takeaway food, up 12.7 per cent, grocery and liquor, up 11.7 per cent, media, up 9.4 per cent, fashion, up 4.6 per cent, and homewares and appliances, up 3.9 per cent.

Personal and recreational goods was the only category to contract in year on year terms. This category was down 2.2 per cent.

Online sales rose fastest in New South Wales on a year on year basis in January, up 9.2 per cent, followed closely by Victoria, up 8.7 per cent and Western Australia, up 8.1 per cent.

NAB estimates that Australians spend $28.88 billion on online retail in the 12 months to January. That is equivalent to around 9 per cent of the traditional bricks-and-mortar sector, which totalled around $320.85 billion in the year to December 2018, according to the Australian Bureau of Statistics.

The NAB Online Retail Sales Index measures online retail spending by consumers using various electronic payment methods, such as credit cards, BPAY and Paypal. The index is derived from personal transaction data from NAB platforms and scaled up to be representative of the economy using ABS and RBA payments data.

NAB made significant changes to the index last month. It has effectively merged SME and Corporate Online into a single index, and now provides more detail by region and industry on a monthly basis.

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