How Did eCommerce do in 2024?
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The trading environment in ecommerce has been a tough one to navigate over the past few years, with ecommerce – the ‘modern’ iteration of retail, where you’d expect growth to be easier to come across – finding it is indeed vulnerable to the sheer amount of macro shocks that have characterised the previous decade or so.
To be fair, we have lived through an exceptional period – the market crash of 2008 introduced a long shadow of austerity that is still holding shopper confidence back now; we’ve had numerous constitutional questions that tie up government focus and the civil service (Scottish independence, Brexit); a pandemic and nationwide lockdowns; a war in Europe that has dragged so much funding away from other things it could have been invested in; political instability and a prime-ministerial merry-go-round.
The pandemic had the most visible impact on retail’s fortunes. Across 2020 and early 2021, with the high street closed, we saw the kind of growth rates in ecommerce that are unimaginable under normal circumstances. That all ended in April 2021, since when we experienced a very long period of revenue declines for ecommerce. Between then and September 2024, we saw almost no growth for any month, barring a handful of times when growth was flat.
Against that kind of backdrop, we were anticipating flat growth for 2024. The below graph shows what happened, with start-of-year forecast displayed alongside the rate of growth that was actually recorded for the overall market and various product categories.
Winners, Losers, and the Road to Recovery
A tempting interpretation is that there were some clear winners and losers in 2024. Health & beauty and home & garden were the winners, the other ones all saw a decline which meant that, overall, it balanced out negatively with the market down -1.7%. The ones that were expected to be down came in a bit lower, the ones that were expected to be up came in a bit higher (with the exception of health & beauty, which continues to see incredibly strong demand online and with fragrance sales particularly impressive).
On first glance it makes the overall market performance seem a bit underwhelming. When we do a forecast at the start of each year, we give an overall expectation (which was 0% in 2024) but also a tolerance either side which reflects a possible course if trading conditions prove to be more or less favourable that expectation. In 2024, these were +2% and -2% respectively.
This means that growth for 2024 came in at the toe-end of ‘less favourable’ and must therefore be regarded as a poor year. But there is a more positive way of viewing what happened which becomes more apparent if we look at growth across the past two years, split out by month.
When we look at it like this, we can break the growth rates into four half-year averages, which reveals that H1 and H2 of 2023 and H1 of 2024 were all in the range of -2-3% for each half-year. H2 of 2024 meanwhile witnessed something of a shift, with the average for that period at +1.7%.
That might not sound that impressive, but remember that the market has been in decline since April 2021, whereas the back-end of 2024 saw four consecutive months of positive year-on-year growth; something that has not happened for a long time and that could be indicative of better, more consistent and reliable growth for the ecommerce market.
Here's hoping, but we are not living in a particularly stable period for global politics so we’ll have to see what 2025 brings.
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