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Just not clicking: Australians pull back on online shopping

Australians are clicking their wallets shut instead of clicking the check-out button. The National Australia Bank online retail sales index fell to 193 points in February from a high of 202 points in January, The Australian Financial Review reported this morning.

Further retail sales data will be released Thursday, but the February pullback in online spending is thought to augur some possibly disappointing numbers for brick-and-mortar retail spending as well.

Online space still poses huge opportunity

Web sales growth still vastly outpaces brick-and-mortar retail sales growth. It’s no contest. While traditional retail sales grow in the low single digits, online sales growth is around 20% on a year over year basis. And some local retailers are doing even better, posting truly massive online sales increases, albeit from quite small bases.

For instance, sporting goods and outdoor wear retailer Kathmandu (ASX: KMD) saw a 50% rise in online sales in the first half of its 2013 financial year. Department store chain David Jones (ASX: DJS) saw online sales in its second quarter of 2013 leap by 288%, and Oroton Group (ASX: ORL) enjoyed online sales growth of 60% in 2012.

How investors can play the online sales trend

It’s important to keep in mind that, even with these impressive rates of growth, online sales account for just a tiny fraction of these companies’ revenues. Australian investors may be better served to look to global powerhouses such as (Nasdaq: AMZN) or eBay (Nasdaq: EBAY) to capture a bigger piece of the sea change.

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The Motley Fool’s purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead.  This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. Motley Fool writer/analyst Catherine Baab-Muguira does not own shares in any of the companies mentioned in this article.



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