New Zealand’s e-commerce market is soaring. Here’s what you need to know

Stratospheric. There are few better words to describe the growth that New Zealand’s e-commerce landscape has seen over the past five years. Current projections suggest that the market will be worth (U.S.) $7.5 billion by the end of this year, a figure that would take the country to 42nd in the global rankings¹. That represents a significant increase on figures from 2022, when New Zealand’s e-comm market was thought to be worth around $4.69 billion² .

Growth of almost 60% in the space of just two years is impressive enough, of course—but the mid-term trajectory looks similarly promising. Estimates have the market on track for further expansion, with sales expected to sit somewhere around the $9 billion mark by 2028¹. Slowing growth, then, but growth all the same.

Even as the market continues to expand, plenty of headroom remains. Although almost 95% of New Zealand’s population has access to the internet³, e-commerce penetration remains relatively low at 61.8%⁴. Grocery in particular has a great deal of runway, accounting for just 10.3% of current online spend¹.

Why has New Zealand’s e-commerce market grown so quickly?

This spectacular growth can be attributed to several factors. Various commentators have pointed to everything from the country’s Ultrafast Broadband Initiative⁵ through to continued smartphone penetration amongst shoppers⁶. As is the case in many other territories, however, it’s difficult to look beyond the impact of Covid-19 as one of the main drivers of change here—particularly when it comes to older shoppers.

Around 300,000 Kiwis shopped online for the first time in 2020. More importantly, over half of these shoppers were 45 or older at the time of placing their first order⁷. The following year, those in the 40–65 age bracket spent 20% more online, with those aged 65 and above increasing their spending by 14%. Clearly, Covid’s role in driving older shoppers online cannot be underestimated.

While e-commerce has clearly gained traction with older shoppers over the last few years, middle-aged customers continue to represent the largest share of the market. 30–44 year olds account for more than a third (37%) of all online spending.

How are shoppers spending their money online?

In 2023, the average online basket in New Zealand was around (NZ) $102.70. This represents a slight decline from $113.00 the year before⁸. With inflation having driven the price of many products up during this time, the drop here suggests that shoppers have found themselves needing to shop particularly frugally to keep costs down.

However much shoppers happen to be spending, though, indications suggest that most of it is spent with grocery retailers. 25% of all online spend in New Zealand is made on food, groceries, and liquor. Following closely behind are “department, variety, and miscellaneous retail stores” (23%), with clothing and footwear rounding out the top three (21%)⁷.

Grocery also seems to have been well-insulated against the effects of inflation. While e-comm spending in the sector fell by 1% between 2021 and 2022, homewares (-10%), department stores (-8%), and recreation (-5%) all fared worse. Only health and beauty (+10%) saw an increase during this period⁷. In total, 28% of Kiwis say that they’re prioritizing their online spend around food and groceries in 2024—the most of any category⁹.

Retailers (and suppliers) looking to maximise their appeal with online shoppers are best to focus on a few specific issues. Asked which factors matter most to them when deciding where to shop online, more than half (53%) pointed to discounts and special offers. Traditional retailers will be buoyed by the fact that shoppers are keen on the retailer having a physical store (22%), while variety is a critical concern for many (21%).

Omnichannel: the new standard for New Zealand retail

For most Kiwis, shopping is no longer an “analogue” process. They don’t only shop either in person or online. Instead, the majority are now omnichannel shoppers—drifting between physical stores and digital channels as it suits their needs.

Recent data suggests that two-thirds (66%) of shoppers now browse online before buying in-store. Around a third (36%) use their mobile to check prices and product details while in-store, and a fifth (20%) say that they browse in-store before buying online⁹.

In our own Consumer Pulse research, we found that around a fifth of New Zealand’s shoppers (19%) had made between one and five online grocery orders for in-store collection in the week leading up to the study. Similar numbers had between one and five online orders delivered to their home—either by the store (16%) or a third-party delivery service (23%). In contrast, 95% of respondents said that they had made between one and five in-person trips to the store.

The Pulse lends further weight to the idea that shoppers now jump between multiple channels, too. More than half (54%) of Kiwis say that they “search online for where to find the best deals," with a quarter (27%) suggesting they do the same for vouchers on products they buy regularly.

A continuing growth opportunity

While inflation might have dampened the e-commerce surge in New Zealand a little, all signs suggest that the market is on the road to continued (and substantive) growth.

In fact, that potential is likely to be realised sooner rather than later. Going back to our Consumer Pulse research programme, a quarter (24%) of New Zealanders said they feel they should be buying more groceries online than they do today.

Clearly, we are now well beyond the digital tipping point. Now, more than ever, retailers and suppliers need to be ready for an era in which customers can be anywhere—browsing, building baskets, and buying wherever and whenever it suits.

¹ eCommerce market in New Zealand – ECDB
² E-Commerce in New Zealand – Eurotext
³ Digital 2022: New Zealand – Datareportal, 15th February 2022
⁴ New Zealand eCommerce Statistics and Trends in 2023 – Commission Factory, 10th August 2023
⁵ Top Online Stores in New Zealand: Market Revenue & Mobile Commerce - ECDB
⁶ The Growth of eCommerce in Australia and New Zealand – Grazitti, 2nd January 2023
⁷ 2022 eCommerce review – New Zealand Business Post IQ, 9th February 2023
⁸ Average online shopping basket size in New Zealand from 2019 to 2023 - Statista
⁹ eCommerce Market Sentiments Report 2024 – New Zealand Post