The growing divide in Australia’s e-commerce market

When my husband and I co-founded New Aim more than 20 years ago, Australia’s e-commerce industry barely existed. We introduced dropshipping to the local market at a time when online retail was still viewed as an emerging channel, not a standalone business. Since then, I’ve watched multiple technology cycles come and go, but one pattern has remained consistent: consumer behaviour changes faster than most organisations are built to adapt.

That gap is now widening. Australia’s $69 billion (2024) e-commerce market is increasingly polarised. At one end are platforms that control demand and customer attention, such as Google, Instagram, Facebook and TikTok. At the other are businesses that control the infrastructure required to serve that demand at scale: supply chains, fulfilment capability, data and systems designed for digital-first commerce.

The most powerful global players, such as Amazon and Alibaba, control both. Most Australian marketplaces and retailers, however, sit uncomfortably in between. They don’t truly own customer traffic, and they continue to rely on infrastructure and operating models designed for physical retail. As margins tighten and competition intensifies, this mismatch is becoming harder to sustain.

Historically, the middle of the market relied on a familiar formula: reasonable brand loyalty, efficient wholesale-style supply chains and marketing channels that could be optimised rather than dominated. That middle is now being hollowed out. Brand loyalty still exists, but it is thinner and more conditional. Customer acquisition is increasingly controlled by platforms and costs are on a one-way trajectory, while legacy infrastructure struggles to keep pace with the speed and economics of digital commerce. The result is a growing group of businesses that neither control demand nor operate with the cost and agility required to compete on execution.

At the same time, e-commerce is fragmenting at the point of demand. Small retailers, creators and influencers are playing a growing role by cultivating highly engaged niche communities. These players don’t control infrastructure or scale, but they do shape taste, trust and purchasing intent in ways traditional retail never could. Loyalty has become more localised and contextual, attached to communities and creators rather than large, generalist brands.

This shift further intensifies the market’s polarisation. As demand fragments, the ability to aggregate, fulfil and monetise that demand at scale becomes even more valuable. Those who control infrastructure benefit from a growing number of small demand sources, while those in the middle struggle to convert fragmented attention into sustainable economics.

Livestream shopping and social commerce are accelerating this change. They collapse discovery, recommendation and transaction into a single experience, turning content into a storefront and communities into live marketplaces. What was once a linear path - browse, compare, purchase - is becoming social, real-time and driven by trust.

For small retailers and creators, this model enables rapid demand creation without the need to build standalone e-commerce infrastructure. For platforms and operators with scalable supply chains, it provides a powerful source of fragmented, high-intent demand. For businesses in the middle, those without a clear audience or operational advantage, social commerce often exposes existing weaknesses rather than solving them.

Australian businesses now face a clear choice. They can invest in owning demand within well-defined communities, or they can build the infrastructure and systems required to serve digital demand efficiently at scale. Those that do neither risk being left behind as e-commerce continues to evolve around them. With the right foundations, Australia can compete globally. Without them, even strong brands will struggle to keep up.