Australian retailers face delivery gap as costs rise

Shippit has published research showing Australian retailers expect growth even as delivery costs rise, highlighting a widening gap between shopper expectations and retailer offers.

The report draws on delivery data, consumer surveys and retailer research across Australia and New Zealand. Standard delivery fees in Australia rose 8.7% to AUD $11.30, while express delivery increased 5.5% to AUD $15.50.

Retailers have also lifted the spending threshold for free shipping. The average minimum has risen to AUD $135 from AUD $123, although 8.8% of retailers still offer free shipping with no minimum spend.

Despite these pressures, 84% of retailers surveyed said they expect growth this year. One in three forecast expansion of more than 10%, even as average basket spend stayed broadly flat at AUD $142.07, compared with AUD $144.69 a year earlier.

Delivery performance improved at the same time. The report found 94.1% of deliveries arrived on time, up from 93.4% last year, while average transit time fell to 2.2 days.

That improvement is not always visible to shoppers at the point of sale. Retailers are advertising average delivery times of 5.2 days at checkout, creating a three-day gap between what is promised and what is achieved in practice.

Two in three consumers said an accurate delivery date before purchase is essential or very important, and 38% said it makes them more likely to buy. Yet only 7.2% of retailers offer accurate delivery estimates at checkout.

Amazon effect

The research suggests competitive pressure from large online marketplaces continues to shape customer behaviour. Amazon, Temu and Shein are forecast to account for 36% of Australian eCommerce this year, while 82% of retailers said they are concerned about those groups gaining market share.

More than half of Australian shoppers said Amazon had raised their expectations of other retailers. That rose to 57% among Millennials and 55% among Gen Z consumers.

Bad delivery experiences appear to carry a high penalty. The report found 68% of shoppers are unlikely to return to a retailer after a poor delivery experience, up from 64% a year earlier.

Asked what would persuade them to shop with a retailer, consumers ranked cost-effective delivery first at 40%, followed by fast delivery at 34%, click and collect at 23%, online inventory visibility at 22%, and easy returns at 21%.

Rob Hango-Zada outlined the pressure facing the sector.

"Australian retail has never been more complex, and delivery has never been more consequential," said Rob Hango-Zada, Co-Founder and Joint-CEO of Shippit.

"Costs are rising, consumer expectations are hardening, and global platforms are growing their share with every year that passes.

"But the retailers making ground aren't waiting for conditions to ease. They're closing promise gaps, building data foundations, and treating fulfilment as a growth lever. This report shows how far the industry has come, and how much further it needs to go."

He also pointed to the difference between checkout promises and fulfilment performance.

"The gap between what retailers promise at checkout and what they deliver is the biggest conversion killer in eCommerce today," Hango-Zada said.

"With Amazon able to fulfil orders within 15 minutes, and shoppers demanding fast delivery while turning their backs on brands that fall short, closing that fulfilment gap must be an operational priority for retailers."

Returns pressure

Returns remain another point of strain between customer expectations and retailer economics. Half of shoppers said they would be hesitant to shop with a retailer that did not offer free returns, but only about one in 10 retailers currently provide them.

The share of retailers offering free returns has fallen sharply over the longer term to 11% from 49% in 2018. At the same time, the proportion offering easy returns recovered to 70% after dropping to 58% last year.

One in four consumers said they would not shop with a retailer if free or easy returns were unavailable, while another 21% said they would be hesitant. A quarter of retailers listed easy or free returns among their main investment priorities.

AI spending

Artificial intelligence and automation have become the top investment priority for retailers in the survey. Some 35% said they are investing in AI and automation, ahead of other spending areas.

Retailers said the main uses would be personalisation and customer insights, conversational AI and virtual shopping assistants, automation in fulfilment, and predictive analytics for demand and pricing.

The report also identified a problem that could limit those plans: two in three retailers said they rarely or never use delivery data to inform their operations.

Matt Lang said the data issue must be addressed first.

"The unlock isn't a smarter AI assistant - it's data we can trust," said Matt Lang, ANZ Online Transport Operations & Strategy Manager at Kmart.

"Our first job is unifying order, carrier manifest, invoice and event-tracking data into a single source of truth across fulfilment and logistics. From there, AI can surface service gaps and cost-to-serve, automate carrier billing queries when discrepancies appear, and eventually give us conversational AI we can interrogate in real time, not just receive reports from."

The findings also point to a retreat from international ambitions. Just 14% of retailers identified international expansion as a top priority this year, down from 66% a year earlier, suggesting tariffs and broader economic uncertainty are reshaping growth plans.

Graham Jackson said local operators still have ways to compete.

"Local retailers can win where marketplaces struggle: trust, service and local immediacy. That means faster and more reliable delivery to local postcodes, clearer delivery promises, convenient collection options, and genuinely easy returns, paired with a brand experience and loyalty that marketplaces can't replicate. The key is turning stores into fulfilment and service hubs, and using orchestration to make fulfilment choices that protect margin while meeting customer expectations," Jackson said.