How are Australian retailers responding to ultra‑cheap marketplaces?

Weaker players are being forced to change operating models, or risk further declines.

Australian retailers are losing ground to ultra‑cheap international marketplaces as shoppers increasingly choose lower prices, faster delivery, and simpler digital platforms.

This is forcing weaker players to cut product ranges, change operating models, or risk further declines, according to Roy Morgan Research Ltd.

Data from the market research firm showed that PDD Holdings, Inc.’s Temu and Shein Group were amongst the fastest‑growing retail platforms in Australia in 2025, whilst mid‑tier department stores and older e‑commerce sites lost shoppers.

The shift reflects changing consumer behaviour rather than a temporary downturn, as shoppers visit low‑cost platforms more often and spend more per visit.

Mass‑market chains such as Bunnings Group Ltd., Kmart Australia Ltd., and Woolworths Group’s Big W have held up by keeping prices low and maintaining broad physical and digital distribution.

In contrast, traffic at Myer Holdings Ltd. and David Jones Pty Ltd. declined as they struggled to justify higher prices for general merchandise that is widely available online.

Legacy platforms including eBay Commerce Australia and Kogan.com Ltd. are also losing relevance as shoppers migrate to apps that offer faster checkout and cheaper goods.

Temu attracted about five million Australian shoppers last year, up 17% from the previous year. Shein’s shopper base rose 28% to 2.9 million. Amazon added roughly 500,000 shoppers, slower growth reflecting its larger base, but continued to benefit from frequent repeat visits.

Most domestic retailers experienced the opposite trend, with shoppers visiting less often.

Combined retail sales from Amazon, Temu and Shein reached almost $12b in 2025, up more than $2b from a year earlier.

Amazon accounted for $7.1b, Temu $3b and Shein $1.9b. The concentration of sales amongst a small number of platforms has increased pressure on retailers with higher costs and slower fulfilment.

Pattern Group, Inc.’s 2026 Marketplace Consumer Report showed Amazon now reaches 60% of Australian shoppers.

The closure of Catch and MyDeal has reduced competition amongst local platforms, whilst Kogan’s shopper reach fell to 15%, down six percentage points.

The data suggest that generalist platforms without global scale are steadily losing share. Price remains important, but it is no longer the only factor driving choice.

Only 42% of Amazon shoppers cited price as their main reason for using the platform, with delivery speed, ease of use, and bundled services becoming more important.

Almost all Australians bought from an online marketplace in the past year, raising expectations around checkout speed, delivery. and returns.

Ultra‑cheap platforms are also improving trust. Temu reached 47% of Australians last financial year and generated $1.8b (A$2.6b) in sales, whilst Shein expanded to 30% of shoppers.

Pattern said consumer perceptions of product quality and reliability improved after both companies tightened supplier controls and expanded product ranges.

Catherine Jolley, head of retail research at Roy Morgan, said retailers that continue to offer broad assortments without matching low prices or fast delivery are likely to keep losing shoppers.

Those that remain competitive are cutting low‑margin categories, using physical stores to speed up fulfilment, or narrowing their focus to product lines where global platforms are less competitive.

Questions to ponder:

1. Are shoppers trading down permanently, or is this still inflation‑driven behaviour?
2. At what point does fulfilment investment stop making financial sense?