But 7% is now "quite competitive" on a global basis, ahead of countries like Singapore, Phil Harpur Frost & Sullivan analyst told CN. This is expected to hit 10% by 2017.
Traditionally, Australia lagged US, UK "significantly" in online retail, due to lack of web presence by larger chains such as Myer and David Jones. But this is changing rapidly, says Harpur.
Other reason for online lag is, traditionally, Australia has a strong brick and mortar store presence, due to its highly urbanized population well served by shopping centres and retail stores.
"While there is still a lag with compared to US and UK, the gap has been bridged significantly over the past 3 years due to strong market growth," says Harpur.
But now, all the majors including Myer, David Jones and Dick Smith are singing the multi channel tune.
Dick Smith CEO Nick Abouud recently revealed ambitions to have Internet sales account for 10% of its total - more than double its current level.
Smart said JB's website is driving instore sales, saying the multichannels "feed off each other".
Aussie consumers are still going to overseas retailers in massive numbers - the report cited a whopping 33-50 percent of all online spend goes international.
Over the past two years, the proportion of online shoppers buying on local sites only increased from 21% in 2011 to 25% in 2012 and 29% in 2013.
Cheaper prices is the main reason why shoppers look to overseas markets, and the greater variety of goods often available.