Online marketplaces reshape Australian retail as logistics race heats up

Research from Manhattan Associates indicates that online marketplaces are reshaping Australian retail as consumer preferences shift towards speed and convenience.

The study reveals that nearly 40% of Australians now make weekly purchases through platforms including Amazon, eBay, Temu and Shein. This notable rise in online marketplace usage is having a direct impact on traditional retail, with 80% of participants stating that their marketplace shopping has reduced visits to brick-and-mortar stores.

Investment in logistics

Responding to this demand, online marketplaces are making considerable investments in local logistics. Amazon's recent allocation of AUD $490 million towards fulfilment centres in Sydney and Melbourne underscores the importance of rapid, reliable service in customer acquisition and retention. These investments are becoming a point of competition in addition to price differences among platforms.

The research found that one in three Australians identify ease of use and delivery speed as primary reasons for choosing marketplaces. Further, 44% would opt for Amazon over Temu even if it meant paying more for an identical product, provided Amazon could deliver faster.

"Speed and reliability are now as influential in the purchase decision as price," said Raghav Sibal, Vice President, APAC at Manhattan Associates. "Two-thirds of consumers told us they're satisfied with marketplace delivery times, which shows that fulfilment performance has become a critical driver of loyalty. Traditional retailers that can match that level of consistency will be in a strong position to compete."

Challenges of trust and returns

The report highlights that despite the popularity of online marketplaces, many Australians still harbour concerns over product quality. Nearly half of respondents believe that product quality is generally lower on marketplaces compared to traditional retail stores. This perception continues to play an important role in loyalty and conversion.

The returns process is also an area that influences customer satisfaction. Two-thirds of consumers indicated that an easy returns process is essential to their experience. However, more than a third have experienced issues with refunds or returning products, suggesting retailers and marketplaces alike need to focus on building consumer confidence through transparent product information and reliable fulfilment.

Physical retail's role

The shift towards online marketplaces presents an opportunity for traditional retailers to differentiate themselves. While convenience remains a dominant advantage for marketplaces, brick-and-mortar shops offer tangibility and trust. Forty-two percent of those surveyed reported that the ability to physically see and touch products still draws them into stores, while 24% value the immediacy of product availability.

The report suggests that by combining these physical advantages with advanced fulfilment technologies-mirroring the speed and precision seen in global marketplaces-retailers can compete at each point of the purchasing journey.

"Amazon's new fulfilment centres in Sydney and Melbourne have raised the bar for logistics performance in Australia, and that's a positive for the entire sector," said Sibal. "It challenges every retailer to think differently and to view their supply chain not just as infrastructure, but as a strategic asset that shapes customer trust and drives long-term sales."

Unified supply chains

Retailers seeking to remain competitive must integrate their online and physical operations through a unified supply chain. The report highlights that real-time insights across inventory, fulfilment, and returns enable retailers to achieve the same efficiency as global marketplaces while making the most of their in-store networks.

"Unified supply chain technology allows retailers to bring together the best of both worlds - the immediacy and connection of in-store retail, with the speed and efficiency of digital commerce. That's where the future of retail competition lies, and it's the space where Manhattan is enabling retailers to truly lead," Sibal concluded.

Manhattan Associates' survey was conducted among 500 Australian consumers.