Australian retailers use AI to boost profits, report finds

Ecommerce Equation has released a report on how Australian online retailers are using artificial intelligence, finding a widening gap between founders who are lifting profitability and those adding work without clear returns.

Drawing on insights from more than 4,000 eCommerce founders in Australia, the study says the strongest results are emerging in two areas: revenue and operations. On the revenue side, gains are appearing in conversion, creative testing and targeting. On the operations side, they are showing up in demand planning, inventory control and workflow automation.

Jay Wright, Founder of Ecommerce Equation, said the difference was not simply a matter of access to software.

"AI is making some founders significantly more profitable, but others just busier," Wright said.

Businesses seeing stronger outcomes tend to apply AI to a clearly defined problem rather than adopt tools without a specific use case, according to the report. It also warns that some founders are misusing AI by treating activity as a result, relying on unverified outputs and producing generic creative work that weakens brand distinctiveness.

Revenue impact

One example centres on Australian apparel brand The Lullaby Club. Founder Marissa was dealing with a fit issue in one top-selling product that differed from the rest of the range, hurting conversion and increasing returns, the report says.

Rather than rebuilding the site, she used AI to create a product-specific fit finder trained on her own size data and customer behaviour. According to the report, the tool achieved 97% accuracy, was live-tested across a community of more than 40,000 people and lifted conversion by 24% in one week. It also contributed to a decline in returns.

Using the same database, the business then built a second tool: a velocity tracker designed to improve forecasting and replenishment decisions. The example reflects the report's broader argument that the most useful applications often begin with a narrow operational or commercial bottleneck.

Another case describes a solo founder who used AI to identify website conversion issues, lifting daily revenue from about $600 to $3,000 and avoiding a planned $15,000 development cost. In a separate example, a founder rebuilt a website around customer objections and increased conversion from below 3% to as high as 11%.

Operational use

Beyond customer acquisition and conversion, some merchants are using AI to automate purchase orders and improve demand forecasting, the report says. In these cases, the goal is to reduce manual work while improving stock accuracy and protecting margins.

Wright said founders seeing stronger results were not necessarily using more AI than others.

"The ones getting results aren't doing more with AI. They're using it in very specific parts of their business where they already understand the problem," Wright said.

That point sits at the centre of the report's findings. It argues that the advantage comes from identifying where a business is constrained and applying AI there, rather than adopting tools first and searching for a purpose later.

"The tool isn't the advantage," Wright said. "The advantage is knowing exactly where your business is stuck, and pointing AI at that."

Risks and limits

The findings also raise concerns about reliability. The report says AI systems can produce information that appears credible but is wrong, making verification an important step when businesses use generated outputs in decision-making.

It also warns that a rush to experiment can distract founders from commercial priorities. Common mistakes include chasing new tools without a defined use case, confusing output with impact and relying on generic AI material that does little to strengthen a brand.

Wright said wider access to AI is changing what smaller businesses can do on their own.

"What's changing is access," Wright said. "Founders are now able to build and improve parts of their business themselves that previously required a team or external spend. That's where the real shift is happening."