Slow delivery and high shipping costs are hampering online retailers ability to capitalise on a trend for shoppers to buy items via their mobile phones.
A report by digital payments company PayPal says 42 per cent of mobile shoppers believe lengthy delivery times negates the convenience of online shopping.
This is despite just over 70 per cent of Australians using their mobile phones to buy online.
PayPal's report, based on surveys of about 1,000 smartphone users and 219 businesses, found more than half of mobile shoppers are reluctant to buy from a store again if shipping takes too long,
And about 70 per cent have not completed a purchase due to high shipping costs, while 42 per cent abandoned a purchase because shipping would take too long.
While the majority said they would definitely buy an item with next-day delivery and that they'd return to a merchant who offered next-day delivery.
PayPal Australia managing director Libby Roy says, despite this opportunity, most Australian retailers don't have plans to offer next-day delivery.
"Australian retailers are operating in a global market where free and fast shipping is now a consumer expectation," Ms Roy said.
"But only a third of Australian business offer next-day delivery and more than 50 per cent of merchants aren't thinking about next-day delivery.
"Put that in the context of the increasing competitive environment, particularly with Amazon and Alibaba entering the Australian market, it really is something merchants should be thinking about."
She said, while Australia has geographical challenges compared to the UK and US, there was an opportunity for improved delivery across the populated cities and coastal areas.
Amazon announced last month that it will roll out its full online retail offering in Australia over the next few years, while China's eCommerce giant Alibaba has opened an office in Melbourne.
Alibaba has indicated that its Australian office will help local brands break into the Chinese market, but it has also fuelled speculation that it wants to roll out its online marketplace in Australia as well.