Whisper It…but eCommerce Might Just Be Back
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ECommerce has been in the doldrums for a few years now, with negative revenue growth, lower conversion and dips in site traffic becoming an accepted part of market conditions; that has been the post-pandemic lockdown reality and the ongoing macroeconomic malaise has made it a very difficult tide to swim against.
A Return to Growth After 41 Months
When I say ‘a few years’ though, turns out we can be very specific on how long the situation lasted – because in September just gone, the eCommerce market saw revenue growth of +3.2%. That might not sound astronomical, but it’s the first time we have seen genuine positive growth for any month in 41 months. That is almost three and a half years of decline.
Of course, at some point this was bound to happen – even with trading conditions being what they are, eCommerce cannot simply keep falling away until there is nothing left. If we are starting to see a revival of sorts, is it because things (shopper confidence etc) are turning around and the glory days are here again, or is it simply a reflection of the declines finally reaching some kind of bottom against which to rebound?
Or, indeed, was September a fluke and we’ll soon be plumbing the depths of negative growth again?
It’s quite possible that all or any of these turn out to be true, perhaps the truth will turn out to be somewhere between them all, but there are definite reasons for cautious optimism that we might continue to see positive growth for eCommerce a little more reliably now.
Signs of Stability and Growth Potential
First of all, there is the recent revenue performance. Five of the last eight weeks have seen positive growth for eCommerce which, while we have seen the odd week here and there record growth in that 41-month period of decline, is a level of consistency we most definitely have not experienced very often. What’s more, the recent declines have not been very heavy – whereas the first half of 2024 was typified by positive growth one week followed by a huge dip the following week; it just could not get going at all.
But it’s some of the other metrics IMRG track that provide the most cause for optimism. Chief among these is traffic to retail sites; there was very little positive growth for traffic across 2023 and the first half of 2024, but that corner seems well and truly turned now – the past eight weeks have all seen positive growth, with a few weeks in double-digit. If more people are coming to retail sites, it brings with it greater potential for growing sales.
The other interesting metric is conversion rate. This refers to the percentage of visitors to retail sites who complete a purchase. There is variation depending on type / size / value of product, but the average rate has been hovering around the 3% mark since the start of 2022. This fell against 2021, the pre-cost-of-living era, when it was closer to 3.5-4%. A drop as dramatic as that is the primary reason why eCommerce has been struggling for growth over that period.
While it has not flown back up to 4% again, it has just nudged up a little bit. That increase may only be 0.1 or 0.2 percentage points or so, but when the overall figure is so low those little increases can really make a difference, particularly when the number of visitors is also rising again.
A Potential Turning Point for eCommerce
Positive signs for Christmas trading then? Maybe. We might not be out of the woods entirely yet, but it is starting to feel like eCommerce might well be back.
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