Are things looking up for eCommerce?
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2024 started off badly for eCommerce sales in the UK and it looked like demand might actually be getting even more suppressed; a real blow to a market that has seen 35 consecutive months of negative monthly year-on-year (YoY) growth following the lockdown periods (the IMRG index has recorded flat growth twice in that timeframe, but no convincing growth).
But – whisper it – are we on the cusp of a return to growth?
This graph shows the growth in online sales revenue across the four months of 2024 so far, split out by week. In the final two weeks of December 2023, we saw some strong growth for the week before Christmas (it rained a lot that week and, it seems that combined with the final ordering date messaging, online saw a boost), but the following week recorded a big decline as a consequence of that being pulled forward. This seemed to drag growth rates down at the start of 2024 to an extent that made any positive growth seem unlikely any time soon. You can see just how far down the year started.
But: since then, the line has followed a consistent trajectory up toward the 0% baseline. The exception to that is the big drop in mid-March, but this is due to Mothers’ Day moving forward in the calendar, so the bulk of the buying for that retail event is also moved around and the YoY therefore does not represent a reliable like-for-like comparison anymore. The second dip (latest week on the right-hand side) is a consequence of the same thing with Easter moving forward in the calendar. Knocking those two temporary skews out, the line is definitely pushing in the right direction.
There’s more too. A primary reason why eCommerce has been struggling over the past two years relates to a sharp dip in conversion. There is some variation by product category, but the overall conversion rate on eCommerce sites has fallen by around 20% compared to where it was before the cost-of-living period began in earnest, bringing with it huge spikes in inflation. Looking at March 2024 however, it actually rebounded 0.1 percentage points compared to the same month in 2023. That might not sound like much, but when average conversion rates hover around the 3% mark, it all adds up; and the significant point here is that it has gone up again, which has not been happening for a long while.
The real pinch-point in the conversion funnel has been on the product page, with a huge fall in the percentage of visitors who add something to their baskets on eCommerce sites. Pre-cost-of-living period, it was around the 17% mark but it fell as low as 12% in 2022. For the last quarter of 2023, it was a percentage point higher than the same quarter in the previous year. Again, not evidence of a comprehensive turnaround, but certainly better news than that to which we have become accustomed.
It might not be that we can pop the champagne corks quite yet. But there is a definite creeping sense that, while things are not necessarily getting markedly better, they seem to have ceased getting markedly worse.
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