Australian fuel prices are back above $2 per litre in most capital cities. Last-mile delivery costs continue to climb. The combination is reshaping how Australian retailers think about fulfilment, and click and collect is emerging as the most cost-efficient model for businesses with physical locations.
The economics are straightforward. Home delivery in Australian metro areas costs retailers between $8 and $15 per order for standard shipping. Express delivery runs higher. Rural and regional delivery costs more again. Click and collect costs the retailer close to nothing in incremental fulfilment expense because the customer does the last mile themselves.
Australian consumer behaviour is moving in the same direction. Research from Inside Retail shows click and collect adoption has grown steadily since the pandemic, but the current acceleration is driven by cost rather than convenience. Consumers paying $2.10 per litre for fuel are making fewer trips. When they do go out, they consolidate. Picking up an online order becomes part of a planned trip rather than a separate errand.
Per-order cost of home delivery in Australian metro areas. Click and collect reduces this to near zero for the retailer.
For retailers operating both physical stores and ecommerce (which is most mid-market Australian retail), click and collect also drives incremental in-store revenue. Studies consistently show that 25 to 40% of click and collect customers make additional purchases when they pick up their order. That conversion does not happen with home delivery.
The operational requirements are not trivial. Click and collect demands accurate real-time inventory visibility, dedicated pickup zones and staff trained to handle collection efficiently. Retailers that treat it as an afterthought (a counter at the back of the store with a handwritten sign) lose the margin advantage to operational friction.
Why it matters
For Australian retailers spending heavily on delivery subsidies to compete with Amazon and other marketplaces, click and collect is a structural cost advantage. It turns physical locations from a legacy liability into a fulfilment asset.
The fuel price driver is particularly relevant in Australia, where distances between population centres are large and delivery logistics are more expensive per capita than comparable markets. As delivery costs rise, the relative value of in-store pickup increases proportionally.
What to do about it
The retailers that build efficient click and collect operations now will have a structural margin advantage as delivery costs continue to rise.
