Chris Wong, NZ Post head of e-commerce, at the NZ Post distribution centre in Highbrook. Photo / Dean Purcell
Chris Wong, NZ Post head of e-commerce, at the NZ Post distribution centre in Highbrook. Photo / Dean Purcell
Online spending surged last month almost immediately after Auckland moved back into alert level 3 and the rest of the country level 2.
Spending in Auckland grew five times faster than elsewhere in the rest of the country in the month of August - a 70 per cent increase onthe same time last year. Transactions from the Auckland region made up 43 per cent of every dollar spent online last month.
New figures from NZ Post show online sales rose significantly in August while transactions from physical shopping declined. Photo / Dean Purcell
New figures from NZ Post show online sales rose significantly in August while transactions from physical shopping declined, this was in line with the trend seen under level 3 in May.
Auckland's 70 per cent growth in online shopping in August was slightly above the highest point of 68 per cent experienced during the first lockdown period.
The state-owned enterprise said the rise in Covid-19 alert levels saw an overall spike in online shopping - but not to the dizzy heights of April and May, under the first lockdown.
More than $511 million was spent online in August, an 31 per cent increase on the same time last year. This was a significant increase on July, which was up 18 per cent on 2019.
While August numbers were big, the impact of Covid-19 restrictions on shopping behaviours was less extreme than the first time the country moved into lockdown, NZ Post's latest eCommerce Spotlight report outlined. In April, the online spend increased by 56 per cent on the previous year, compared to 31 per cent in August.
Chris Wong, NZ Post general manager of business marketing, said 71 per cent of online orders in August were with a domestic retailer, a continuing trend observed since the end of March.
"What we also saw was the shopping habits of New Zealanders; people choosing to buy the same things online - food and groceries and homewares and electronics were two categories that continued to grow strongly across the month," Wong said.
"Spend in the second lockdown was lower than what we saw in the first Covid lockdown. We didn't have an alert level 4 which caused pent-up demand and a big spike in volumes that we saw in the first Covid lockdown. There was a difference, we grew 31 per cent in August whereas if you look at May the online spend grew 56 per cent.
The NZ Post distribution centre in Highbrook. Photo / Dean Purcell
"Auckland [online spending] growing 70 per cent was a big surprise to us. Being 70 per cent up on the same time last year was good to see and there was parallels with what we saw in the first Covid lockdown."
Approximately 1.3 million New Zealanders shopped online in August - one of the highest numbers in a single month NZ Post has seen this year. Of those 24,000 were shopping online for the first time.
"Of all the demographics everything increased, but similar to the first lockdown we saw the fastest-growing group were those aged over 75," Wong said.
In 2019, online shopping grew about 13 per cent accounting for about 9.8 per cent of all retail spending in this country. In the past eight months of 2020, online shopping has accounted for 11.8 per cent of all retail spending.
Source: NZ Post
NZ Post is the largest delivery business for online shopping in New Zealand. Wong said it was hard to know how the economic downturn would affect online spending in the lead-up to Christmas.
"March signalled the beginning of one of the most unpredictable and rapid-growing periods for online shopping and that's been driven by Covid and the pandemic. This has seen a huge number of new shoppers join online as well as some categories really growing."
S&P Global says NZ Post's surge in parcel volumes following New Zealand's heightened lockdown status has increased delivery costs and required additional investment to cater for growth.
The financial research company said even though this weighed on NZ Post's operating performance in the second-half ended June 30, "the company's relatively strong trading performance in the first-half propelled a return to profit for fiscal year 2020, compared with a loss in fiscal 2019."
NZ Post is the largest delivery business for online shopping in New Zealand Photo / Dean Purcell
S&P expects the boom in e-commerce to propel parcel volumes, but said more investment in its infrastructure and distribution network was required to meet growing demand.
"Based on its current scale and run rate, we do not expect the group to generate sufficient operating cash flows amid declining letter volumes and to fund required infrastructure investment, absent of government support.
"We view long-term government support as necessary to cover NZ Post's shortfalls in free operating cash flows to maintain balance-sheet liquidity and prevent leverage from increasing."
