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Online marketplace Redbubble says its sales fell by 16 per cent in the third quarter, despite a high level of returning customers who first engaged with the brand during Covid lockdowns.

In a trading update, the company said its third-quarter sales fell to $384 million with gross profit down by 22 per cent to $144 million. Operating EBITDA was $4.5 million.

The group has also registered ‘strong’ overall customer retention during the quarter with 47 per cent of marketplace revenue coming from repeat purchases – the highest level since the company was founded.

In the update, the company said it would look to both organic and non-organic opportunities to boost its share price, which it believes does not accurately reflect the fundamentals and prospects of the business.

“We intend to invest in both the artist and consumer experiences, to improve loyalty and retention and to ensure long-term growth,” said Michael Ilczynski, CEO.

Last year, the business hit $144 million in profit, up by 118 per cent, reflecting its strong consumer demand over the holiday period.

Ilczynski reiterated that the company’s revenue and profit performance are in line with expectations. 

Sarah Willersdorf is a partner and managing director at Boston Consulting Group. Based in New York, the Australian was walking her eight-year-old son to school late last year when they bumped into a friend of hers.

Santino, said to his mother’s friend: “Are your sweatpants Balenciaga?” Willersdorf’s friend of 10 years nearly fell over. How on earth had an eight-year-old boy even heard of luxury fashion house Balenciaga?

The answer to that question was that Willersdorf’s son had purchased a Balenciaga-branded outfit – otherwise known as a skin – for his character in online video game Fortnite.

In another example of life – and the potential for new revenue streams and marketing avenues – in the virtual universe, in 2020 online fashion retailer NET-A-PORTER created a space inside Nintendo’s virtual gaming platform Animal Crossing: New Horizons where gamers could take their avatar to meetings in a wood-paneled boardroom, photoshoots and browse back catalogues. French fashion designer Isabel Marant created five outfits for the occasion, so gamers could dress their avatars.

Virtual concert

Early last year McDonald’s partnered with 88rising, an Asian artist collective, to create a virtual Lunar New Year concert by Chinese hip-hop artist Masiwei that was broadcast exclusively on the McDonald’s app. This year the fast food behemoth held a virtual exhibition showcasing the 12 animals of the Chinese zodiac, Eventually McDonalds is planning to set up storefronts at virtual events that will sell virtual NFTs and food, which can be delivered during the event.

These examples demonstrate why companies in sectors ranging from fashion, beauty and fast food to property need to be monitoring and experimenting in the virtual world, aka the metaverse, says Willersdorf, even if it is early days.

“There’s not a perfect metaverse right now,” she warns.

“It’s not going to be your biggest revenue driver right now. Everyone’s coming out of COVID-19, so I think you have to keep the wheels on and be doing what you’re doing, but you also need to start experimenting a little bit,” argues Willersdorf, who has lived in New York for 10 years and in London and Paris before that.

“The metaverse today is like the internet was in the late 90s. It’s a new medium, and we’re just learning how to use it,” adds Jared Spataro, corporate vice president of modern work at Microsoft.

There are limitations to the platforms and the hardware such as virtual reality headsets that are used to access the metaverse.

Brand extension

Kelly Brough, retail lead at Accenture ANZ, says the metaverse is a useful tool for brand extension, similar to social media, ecommerce and stores or venues.

“When I’m talking to my clients right now, it’s very much about, what are the experiments that make sense to do, to start to understand this?”

But companies should expect the metaverse will expand quickly, given the huge amount of money that is pouring into start-ups in the sector. Companies such as Microsoft, Apple, and Sony have also made significant investments in the area.

“What this represents is new ways to shop, new ways to engage, and I think new ways to build communities,” Willersdorf says.

It is not just consumer-facing industries that need to get on board.

Since last June, more than 2000 of Accenture’s employees in Australia and New Zealand have been introduced to their colleagues in the company’s metaverse.

All new employees spend a quarter of their orientation training in the metaverse. They create an avatar and access One Accenture Park, a shared virtual world where they can interact with colleagues and complete training modules.

Last year, Microsoft released a version of its Teams collaboration platform, known as Mesh, which creates a metaverse-like experience where workers can meet each other and collaborate via avatars.

Willersdorf says some companies are considering whether they might need to create a head of metaverse role, given that expansion in the virtual world will require co-ordination across companies’ technology, marketing, sales, payments, branding and legal departments.

“The coordination even to do experiments is huge. Also, you’re typically working with a lot of other companies and vendors, and you’re contracting with big platforms and maybe small developers who are going to do the design.”

Australian households spent $62.3 billion buying physical goods online last year, according to data published by Australia Post today.

The Inside Australian Shopping Report says online purchases have almost doubled pre-pandemic levels recording a 12.3 per cent increase compared to the previous period. Four in five Australian households shopped online last year across a broad range of retailers and categories.

Metro areas recorded a 12.9-per-cent increase year-on-year while regional areas recorded a 10.6 per cent boost. Top categories for shoppers include athleisure, baby products, pet products and footwear.

Australia Post Group CEO and MD Paul Graham said e-commerce was a ‘lifeline’ for people and businesses alike.

“Even as restrictions eased, Australia’s love of online shopping has not faltered, evidenced by the 5.4 million households we saw buying online each month last year, representing a 39 per cent increase from 2019.”

He added that today’s online shoppers are looking for choice and convenience, reliability in supply and delivery and sustainability is having an enormous impact on which brands shoppers choose to buy from and where they spend their money.

In October last year, Australia Post announced an additional $400 million for new facilities, fleet and technology to meet the increasing demand from businesses trading online.

Auspost named Melbourne’s Point Cook suburb as the nation’s biggest shopping hotspot, followed by Liverpool in Sydney and Hoppers Crossing in Victoria.

Luxury retailers Missoni and Brunello Cucinelli have set a hectic pace in snaring prime leases in the Dexus-owned 25 Martin Place as the city comes back to life with workers and the influx of new residents.

Known previously as the MLC Centre, 25 Martin Place will be home to exclusive labels, including Valentino, as part of the centre’s $170 million transformation.

Upmarket retail has defied the global pandemic and stores across the city are have continued to open or sign leases over the past two years as consumer confidence improves, as evidenced by the latest ANZ-Roy Morgan Consumer Confidence Index, which rose by 1.3 per cent to 94.6 in the past week.

Stewart Hutcheon, Dexus’ executive general manager, industrial, retail and healthcare, said the group was excited that Missoni and Brunello Cucinelli have chosen to launch their flagship operations at 25 Martin Place in the Castlereagh Street luxe retail precinct.

“These premium and contemporary retail experiences will transform the boulevard of Castlereagh Street into a modern runway of luxury retail in Sydney’s CBD, with each luxury brand meticulously selected to curate a premium global shopping experience,” he said.

Dexus, the ASX-listed diversified property owner and manager with a market value of $11.63 billion, changed the name of the MLC Centre in Sydney’s city last year to 25 Martin Place to reflect the next phase for the long-standing tower.

It also sits close to the new Metro station and a swathe of new luxury apartment towers which will swell the number of people living in the city.

At the base of the Harry Seidler-designed 67-storey office tower, the retail destination will deliver around 6000 square metres of retail across four levels, with over 50 diverse retail, dining and cultural experiences.

The flagship stores are under licence from the family-owned Graaf Group, a property acquisition, development and management company that continues to expand its portfolio of luxury fashion retail, prestige property and high-end hospitality venues.

Italian fashion house Missoni is a globally recognised name across the fashion and design industries, recognised for their fine craftsmanship and iconic chevron pattern, while Brunello Cucinelli has ready-to-wear men’s and women’s collection, shoes, bags, small leather goods and accessories.

Gennaro Autore, founding director, Graaf Group said, as exclusive licensee he chose 25 Martin Place as a key destination to launch the flagship stores of well-known international brands Missoni and Brunello Cucinelli in the Australian market.

“We are delighted to bring these fashion ateliers to Sydney, extending their global presence as they join many of the world’s most-applauded fashion houses in the Australian market,” Autore said.

Dexus’ head of retail and healthcare leasing, Eddie Giraldo, said work was undertaken with Harry Seidler and Associates and architect Woods Bagot to build on Seidler’s original design principles to deliver a contemporary precinct and revitalised public spaces for Sydney’s CBD.

“The luxury retail, dining and entertainment offering at 25 Martin Place is reinvigorating the CBD day and night, reaffirming its status as the vibrant destination for fashion, culture and dining,” Giraldo said.

It is expected that further retailers will join the 25 Martin Place precinct in the coming months.

In addition to the new luxury precinct fronting onto Martin Place will be a revitalised Theatre Royal Sydney, as well as greater connectivity for workers and visitors via a new commercial tower entrance from Castlereagh Street.

Listed online marketplace retailer MyDeal has launched a new activities platform, Amazed.com, using data to ramp up personalised local experiences for consumers in Australia.

Product director Sam Pinney is heading the business, who joined from rival online marketplace Redbubble about eight months ago.

Over 250 suppliers are already on the marketplace, including Melbourne Zoo, Liberty Balloon Flights and Experience Co. There are over 1000 experiences.

Mr Pinney told The Australian Financial Review there is a big opportunity on the back of COVID-19 with consumers looking for local and personalised activities with penetration growing as more sales shift online.

“We are also offering bespoke type experiences, which might be local foods and local history tours, through to cruising local distilleries and breweries. So, we’re really trying to bring the best of those secret adventures that are just around the corner, and you never knew about them,” he said.

“With a few taps and clicks, I can find it, book it, and be on my way. Data is going to drive the experience. [It is all about] connecting the right activity with the right customer at the right time.”

Amazed will use data to recommend relevant experiences, categories, and sellers at scale using real time 1-to-1 AI technology.

“With the power of data and insights, these suppliers in future will be able to expand their businesses,” Mr Pinney said.

MyDeal chief executive and founder Sean Senvirtne added Amazed had been 18 months in the making and the activities are resonating with MyDeal’s existing consumers.

He said Amazed is a “fully open marketplace” which means control remains with the supplier partners, helping to set it apart amid a crowded space with the likes of Booking.com, Red Balloon, Airbnb and Adrenaline all seeking a slice of consumers’ dollars.

Globally, consumers spend about $US145 billion ($193 billion) each year on experiences and activities, a market which is tipped to reach a nearly 20 per cent compound annual growth rate over the next five years, according to Euromonitor International.

Mr Senvirtne said while COVID-19 gave the experiences market “a bit of a punch in the guts”, it is starting to open back up again.

“We fundamentally believe you do not have to travel to try something new,” he said.

Amazed earns revenue via commission on gross transaction value (GTV) through the marketplace. GTV represents the total value of cash transactions before deducting refunds, discounts and coupons, but after GST.

Amazed is rolling out in Australia, with New Zealand to follow later this calendar year, and the US and the UK in 2023.

Mr Senvirtne plans to leverage existing marketing and customer acquisition capability, which means Amazed can scale up fast. MyDeal’s customer acquisition costs rose to $22.1 in the December half from $17.6 a year ago.

It will invest $1.5 million per year over the medium term into Amazed, which will be funded out of existing cash which stood at around $40 million as at December 31.

MyDeal is an online marketplace that sells mainly home and garden items, including outdoor furniture.

Like Temple & Webster, Kogan and Wesfarmer’s Catch, MyDeal reaped the benefits of the pandemic last year as consumers spent up on their homes since they could not travel overseas.

In the latest December half year, MyDeal revenue rose 55 per cent to $33 million, underpinned by a 20 per cent rise in gross sales to $153 million. More than 60 per cent of customers returned to buy again.

Mr Senvirtne said the group was on track to meet its full-year guidance for gross sales of $270 million and $500 million gross sales and positive earnings by fiscal 2025, which does not include Amazed gross transactions.

Twitter is on the hunt for a new Australian chief after former country head Suzy Nicoletti quietly departed the controversial social media platform.

Ms Nicoletti, who replaced Karen Stocks as managing director of Twitter Australia in 2016, is the third country manager from the Asia-Pacific region to depart the short form, text-focussed social media platform since last August.

A Twitter spokesman said Ms Nicoletti, who was a senior Google Australia employee before moving to Twitter, had decided to leave Twitter to “spend more time with her family” and would not be returning from her maternity leave.

“We will immediately start the search for our new Australia managing director, and will consider both internal and external candidates,” the spokesman said. “Angus Keene will continue to serve as acting managing director of Twitter Australia.”

Ms Nicoletti confirmed to this masthead she had this week joined Israeli e-commerce startup Yotpo as Vice President and General Manager of the Japan and Asia-Pacific region.

She said she was excited with the new role as Australian retailers flourished online. “Australian e-commerce brands have demonstrated they can play on the global stage, and it’s Yotpo’s mission to ensure we’re on the ground to help them succeed,” Ms Nicoletti said in a statement.

Twitter, which is facing increased scrutiny over its role in the spread of misinformation, has been hit by key executive departures across the Asia-Pacific region over the past year.

Southeast Asia managing director Arvinder Gujral departed his role in August after eight years with the company. At the same time Twitter made the role of managing director in India, which had been held by Manish Maheshwari, redundant and replaced the position with a “leadership council”.

Twitter co-founder Jack Dorsey resigned as chief executive late last year to focus on his other company, Block, which owns payments companies Square and Afterpay. Former Twitter chief technology officer Parag Agrawal now heads that company.

Along with other social media giants, Twitter has become a focus of debates about misinformation, free speech and content moderation globally, putting its bosses in the spotlight. In Australia, the federal government has launched a Parliamentary inquiry into online safety, legislated to give more powers to the eSafety Commissioner and flagged laws to help people unmask anonymous accounts that damage their reputations.

Yotpo, which was founded in 2011, and is valued at US$1.4 billion (AU$1.9 billion), offers a marketing platform to brands doing business online such as KMart, General Pants and Rip Curl, with features including text messages, referral codes and reviews.

David Michaeli, Yotpo’s head of new markets, said the company had been growing quickly in Australia as the country’s online retailers increased their numbers and trade as a result of COVID-driven restrictions.

“With this in mind, we knew we needed the local leadership team to be no less than excellent, and we’re now proud to welcome Suzy to join and lead this all-star team,” Mr Michaeli said.

Zip Co said its all-scrip acquisition of Sezzle will help it achieve faster profitability, pledging to get to positive cash earnings by the 2024 financial year as a larger user base makes the payments platform more attractive to US retailers.

Zip is raising $200 million via a placement and share purchase plan to drive growth on the back of the acquisition of United States-focused Sezzle, as the buy now, pay later industry races to get to scale and reduce bloated costs.

The deal values Sezzle at $491 million, according to Zip, a 22 per cent premium to spot prices of its ASX-listed shares, which remained in a trading halt on Monday. Investors have been pushing for loss-making technology companies to focus more on profits and show disciplined use of capital, given interest rates are set to rise.

The transaction, due to be completed in the July quarter, has been unanimously approved by the boards of both companies.

“We have taken stock of what is happening in the world around us and capital markets, so it was important to put in place a target to achieve sustainable growth much faster than we had originally forecast,” Zip co-founder Larry Diamond told The Australian Financial Review.

“We were already thinking about that and this transaction helps us sharpen our thinking and simplify the investor story as well.”

The combined business will have more than 13 million customers (Zip’s 10 million plus Sezzle’s 3.4 million); and 129,000 merchants (Zip’s 82,000 plus Sezzle’s 47,000).

Sezzle will be rebranded as Zip, which also took over the Quadpay brand in the US after buying it in 2020. Zip will become more focused on the US overall, with 60 per cent of sales to be generated there, up from 48 per cent now.

Zip expects $130 million of synergies from the deal as overlapping costs are eliminated, and for top-line growth to continue. Mr Diamond said buy now, pay later is expected to see the strongest growth of any payment method in the US, from a low base of 2 per cent.

In the US, Zip’s customer app is superior to Sezzle’s but Sezzle has been stronger in merchant relationships at the checkout.

Analysts said in the medium term, a larger Zip would be more attractive to financial institutions looking to acquire BNPL after its larger rival Afterpay was scooped up by Block, formerly Square.

“I think the deal makes a lot of sense, especially for Sezzle, which is too small and probably wouldn’t have survived on its own,” said analyst Marc Kennis from Stocks Down Under.

“The new combination probably puts Zip/Sezzle more prominently on the radar screens of large financial institutions ... An acquisition of Zip with Sezzle is still the likely end game for the company, in my view. In the US, the new combo is probably the most attractive independent player right now.”

However, one banker said the deal points to panic in the buy now, pay later sector, with shares in Zip and some smaller operators down around 80 per cent from peak levels. “Zip placing stock at a discount and buying a sub-scale business at a premium?” he said. “The banker in me struggles to remember a deal that smacks of more desperation, and where putting two failed strategies together makes a successful one.”

Stronger balance sheet

Zip will look to list its shares on a US exchange as part of the deal, opening up fresh capital-raising options. Its ASX stock is one of the most highly traded stocks among retail investors.

The $150 million placement and accompanying $50 million share purchase plan was first reported in The Australian Financial Review’s Street Talk column on Sunday evening. Zip will issue 78.3 million new shares, equal to 13.3 per cent of its current shares on issue. Street Talk reported on Monday morning the shares will be placed for $1.90 each, a 14 per cent discount to the last close.

Sezzle founder Charlie Youakim will join Zip as head of Americas and as an executive director of its board. Sezzle has relationships with several large US merchants not on Zip’s books, including Ikea, Target and Shopify.

Zip said the merger would take place under the laws of the US state of Delaware. Shareholders in Sezzle, whose shares jumped 14 per cent on Friday, will receive 0.98 Zip shares for each Sezzle share they own. When completed, Zip shareholders would own around 78 per cent of the combined group while Sezzle shareholders would own the remaining 22 per cent.

“With Sezzle, we are doubling down in the US, and believe we have what it takes to win in that core market,” Mr Diamond said on the investor call.

The deal comes as Zip released delayed interim results showing a deepening loss and bad debts. Last week it pre-reported a cash EBTDA loss for the first half of $108 million, much deeper than analysts had expected. It’s adjusted loss before tax was $153.6 million.

Zip pledged the acquisition of Sezzle would help it reach positive EBTDA by the 2024 financial year, although analysts said more detail is needed to get confidence it can hit the target.

“Achievement of [free cash flow] break-even will require a combination of higher volumes, which will require Zip to grow its loan book, and right-sizing of its current cost base, in addition to revenue and cost synergy targets being achieved,” said UBS analyst Tom Beadle.

Improving credit quality

Zip revealed net bad debts had risen to 2.6 per cent of sales, an increase of 132 basis points on 2021 levels. Bad debts plus expected credit losses rose 402 per cent to $148.3 million, representing 3.3 per cent of sales. Marketing expenses rose by 182 per cent to $74.5 million.

Zip co-founder Peter Gray said close attention is being given to improving credit quality to reduce losses to the target of 2 per cent of sales. He added it is well able to withstand rising cash rates; a 25 basis point increase in base rates will increase funding costs for a “pay in four” transaction by 2 basis points, he said.

“We are committed to our global expansion plans but are taking a more disciplined approach,” Mr Gray said.

Strong transaction growth continues: Zip reported record sales volumes of $4.5 billion through its platform over the first half, up 93 per cent, and around half the value that is going through Afterpay. Revenue is also at record levels, up 89 per cent at $302 million for the half.

Zip’s total customers grew to 9.9 million, up 74 per cent compared with the end of the previous first half; its merchant numbers grew 113 per cent to 81,800.

Path to profitability

The focus on creating a path to profitability comes as Zip’s share price suffered a horror run, falling 30 per cent in the past month as investors worried about deteriorating unit economics, although it rose sharply at the end of last week.

While Zip pointed to record volumes it said higher than expected bad debts had squeezed the “cash transaction margin” to 2.1 per cent, down from 3 per cent in the second half of last year. Zip said it would lift this margin when the merger is complete to target higher than 2.5 per cent over the medium term.

The acquisition of Sezzle comes amid a wave of industry consolidation. Afterpay’s co-founders Nick Molnar and Anthony Eisen sold to Block, which will use BNPL as part of a broader range of services in a financial super app. Meanwhile, Humm, a sub-scale operator, is being acquired by Latitude.

Zip has already been scooping up BNPL investments, including Quadpay, a transformative deal to grow in the US market, struck in the middle of 2020.

Like Block’s Cash App, Zip also aspires to create a multipurpose digital wallet for users that provides banking and investment options as well as BNPL products. Late last year it formed a partnership with WebBank and will compete more directly with US neobanks.

Some have a dim view of Zip’s ability to win in the US, even with Sezzle. “Zip buying Sezzle is basically the Titanic buying the Hindenburg,” consultant Brad Kelly said on social media last week.

But Mr Gray said bad debts will not deter it from releasing new products in the US. “Despite the current credit conditions affecting this jurisdiction, the growth trajectory continues, and the US continues to present growth opportunities, given low BNPL penetration levels,” he said.

• Smart receipt startup Slyp has raised $25 million in a Series A funding round to fuel its mission to digitise receipts for businesses and individual consumers. 
• The Australian fintech says it wants one in two Australians accessing Slyp through their banking apps by the end of the year. 
• The company is among a raft of startups globally seeking to build products around digitised receipts.

Smart receipt startup Slyp has raised $25 million in a Series A funding round to fuel its mission to digitise receipts for businesses and individual consumers. 

The Australian fintech says it wants one in two Australians accessing Slyp through their banking apps by the end of the year. 

Along with further investment from the big four banks, which backed and helped build the technology behind Slyp, the funding round was also supported by new investors including Luke Sayers’ advisory and investments firm Sayers Group, and Catch Group’s Gabby and Hezi Leibovich.

The company, which was founded in 2016, is among a raft of startups globally seeking to build products around digitised receipts, as e-commerce and online banking has innovated and businesses have raced to catch up. 

At its core, Slyp enables receipts to be shared directly into a customer’s banking app in near real-time.

Beyond the improved experience for consumers, such as reminders about product warranties, or the ability to connect directly to the retailer’s website, Slyp follows a raft of similar startups globally that have sold themselves to businesses as a way to use receipts as another touchpoint for digital marketing, with the ability to accumulate and analyse more data.

The UK’s Flux partnered with Barclays in October last year to onboard its digital receipts platform for the bank’s customers. 

While Slyp’s product is free for consumers to use, banks and merchants currently pay a fee. Banks are charged a recurring subscription fee based on the number of active users, while there’s a transaction fee for merchants.

The raise follows several business developments in recent months, including a deal signed with Chemist Warehouse along with more than 100 other retail and hospitality groups like General Pants Co, Harris Farm and Mitre10. 

And in October the company partnered with its main Australian competitor, Divipay, an all-in-one smart corporate card and expense management platform, to launch in-app digital receipts for businesses at the point of sale. 

Co-founded by Paul Weingarth and Spiro Rokos, previously PayPal executives, along with former ANZ group data officer Mike Boyd, at this stage the Slyp technology only works with NAB’s banking app or via SMS. 

However the company has planned to go through the integration process with another of the banking giants by the end of the year. 

Weingarth said moving toward integration with its backers, the big banks, was crucial for its ability to scale in coming months, with the funding round giving it another 18 to 24 months of runway.

“NAB has been our foundational banking partner, and they’ve supported us and helped us grow into a product-ready scalable platform,” Weingarth said. 

“That gives you confidence and conviction when you walk into another bank that you’ve already gone through the red tape with another tier one bank,” he said. 

“It derisks the decision for a large bank. NAB took that risk, and we owe a lot to NAB.”

The next step is building a new loyalty product, which Slyp intends to launch within six months, that will let consumers link loyalty cards to their payment cards and “set and forget”.

Peter Mastos, founding partner at VC firm Sayers, said the last few years have seen an explosion in the breadth of fintech startups. 

“[This year] is going to be all about finding innovative solutions that scale rapidly and efficiently. Smart receipts are one of those solutions where we scratch our heads and ask ’why doesn’t this exist already?’,” Mastos said. 

• Building the tech skills of Australian workers could recoup some of the GDP lost through the pandemic.
• Those are the findings of a new report from RMIT Online and Deloitte Access Economics.
• Tech skills are “worth a lot more than how much we’re investing in training,” said Deloitte partner John O’Mahony.

A new report claims Australia lost out on nearly $150 billion in economic growth through the COVID-19 pandemic —but providing workers with digital skills could help erase that significant productivity deficit.

In a fresh report detailing Australia’s skills shortage and how the coronavirus crisis has reshaped the jobs market, RMIT Online and Deloitte Access Economics suggest the Australian economy produced some $148 billion less in GDP than it would have in a pandemic-free world.

The nation’s closed border policy had an outsized impact on its own, carving away $32 billion from the GDP Australia would have amassed otherwise, the report says.

The report does not just count the cost of COVID-19 — it suggests that without a change of course, Australia’s economy will be permanently smaller as a result of the coronavirus productivity divot.

“This means that reverting to pre-pandemic trends isn’t enough,” the authors state. “Instead, even stronger growth is needed to correct for losses incurred during the pandemic.”

Training in digital skills a necessity for growth

The report’s authors suggest re-skilling Australian employees is a viable way to make up for lost time.

John O’Mahony, partner at Deloitte Access Economics, said the research showed businesses, governments and individuals have an “extra responsibility” to “think smarter about how we can drive more growth inside workplaces”.

While ceding the report was prepared in conjunction with RMIT Online, which provides tech courses to workers looking to boost their skill set, O’Mahony said “businesses need to be investing more in re-skilling, and employees need to be putting their hand up and saying, ‘I want to be training more'”.

“And the evidence for the last two years is that while we’ve had more time in our hands during COVID, we haven’t used a lot of spare time to do more to do more training.”

Employers spend just two days a year actively bolstering the skills of their employees, O’Mahony said, meaning some workers are being left behind as digital skills infiltrate every aspect of working life.

Those skills are “worth a lot more than how much we’re investing in training,” he said.

“The research here finds that on average, picking up digital skills lift a worker’s productivity, lifts their wages, by around 9% a year.

“So if you think the return on getting these digital skills is 9% a year, it’s about $7,500 in wages.”

Combining new skills with old-fashioned migration

The report’s findings speak to the concerns of employers, who say a shortage of tech-centric skills have driven some wages into the stratosphere and constrained productivity.

While re-skilling workers with tech know-how will ease those concerns, the authors also acknowledge the role skilled migration could have in bolstering Australia’s productivity.

Policies which effectively brought international migration to a standstill mean Australia’s population is nearly 380,000 below where it would be without border closures, the report says.

In sharper terms, Australia missed out on more than 21 million hours of potential labour in September 2021 than it would have otherwise, the authors argue.

Of more than 400 business leaders surveyed for the report, more than half said it became more difficult to attract new staff through 2021.

And of the employers who said hiring the right staff was difficult, 27% said border closures had restricted access to talent — narrowly more than any other reason listed.

“For Australia to achieve its full economic potential, it will also need to reopen borders and get the most out of top international talent to help fill the skills gap,” O’Mahony said. “So it will also need to do that as well eventually.”

Prime Minister Scott Morrison yesterday revealed Australia’s hard border policies will come to an end on February 21, ushering in new waves of skilled migrants previously locked out of the country and easing some of those talent bottlenecks.

However, The Australian Financial Review reports there is little appetite in Canberra to lift the cap on net international migration from 160,000 a year.

Regardless of immigration policy tweaks, if they arrive at all, the RMIT Online and Deloitte report argues employers ought to take it on themselves to maximise the talent available today.

“Simply reopening [Australia’s] borders is not going to replenish the number of migrants who did not come to Australia over the past two years, making upskilling our existing workforce critical,” the report states.

• A newly-released report on hiring trends by global recruitment firm Talent reveals the impact of talent shortages in the tech sector.
• Its analysis of global markets showed workers’ salaries had soared by 15% to 30% on average.
• Legacy organisations, including the big four banks, recruited the lion’s share of talent.

Australian tech workers are fielding counteroffers of up to 30% and tech roles are seeing pay rises of around 15%, according to new data, as restricted border access and the resulting skills shortage offer a boon for those in in-demand fields. 

A new report from global recruitment giant Talent examines global market conditions, along with hiring trends and predictions for the 16 cities the organisation works across in Australia and New Zealand, Africa, Europe, the Middle East, and the US. 

Along with revealing the most in-demand tech skills for 2022, it released findings on the local tech talent pool and skills trends, along with the benefits beyond salary candidates are looking for.

Globally, the widespread dearth of talent in growing sectors continued to be reflected in soaring salary increases and jumps in counteroffers. 

Tech salaries are increasing 15-30% on average globally, Talent’s analysis showed.

Additionally, it said counter offers for tech roles were up 20% to 30%, with candidates reporting they were fielding two to three opportunities on the go per job search. 

Unsurprisingly, given the noise from tech companies committing to permanently transitioning to remote-first work, the report showed the ability to work from home was now a non-negotiable for candidates. 

Legacy organisations gain largest share of talent 

Talent’s data showed tech workers in Sydney generally have a tenure of 1.9 years, with the top employers Telstra, Optus, Westpac, Commonwealth Bank, and IBM.

In Melbourne the top-hiring companies also included NBN Australia, Australia Post, along with NAB and ANZ. Employees clocked an average tenure of 1.8 years. 

Several industry experts have told Business Insider Australia in-demand workers are less attracted to the stability of legacy organisations and even established tech companies, favouring startups innovating in newer areas like fintech and crypto. 

A wave of early- and mid-career Australians jumping ship from legacy businesses, global consultancy firms, and even the fast-growing fintech space, in order to get in on the ground floor of the crypto boom.

However, the data suggests the ability for banks and government to offer salaries pushing the top end of the bracket, along with their relative size, are continuing to recruit a wide pool of the country’s talent. 

Talent’s salary guide places the average salary of a senior developer and business analyst in Sydney at $170,000.

Data scientists, data analysts and analytics managers salaries round out at $150,000, $90,000 and $150,000 respectively, it said.

In Melbourne, the average highest paying tech salaries before C-suite positions included big data architects at $230,000 and cloud architects at $220,000. 

The average salary for business intelligence architects is $200,000, the report said.  

Borders will reopen but impact will lag

Simon Yeung, managing director at Talent in Victoria, said he expected continuing merger and acquisition activity within the superannuation and wealth management sectors, along with “further activity in the banking sector as it gears up for open banking in February 2022 and a continued rise in digital businesses”.  

The next few months will only accelerate demand for tech skills to enable these projects, he said.

Matthew Munson, managing director at Talent in NSW, said with the exception of travel and hospitality, every sector in Australia had seen significant growth since the start of the pandemic. 

He expected the market would continue on this trajectory for the next six to 12 months, but conceded future COVID-19 variants and the ongoing relaxing of international borders could influence conditions.

“When the borders are opened to skilled migrants there will still be a lag effect when it comes to the impact this will have,” Munson said. 

“The demand for top talent looks to continue to increase and all the organisations that we work with are expecting to grow their teams in 2022.”