The latest Online Retail Index from IMRG has revealed e-commerce sales have been slow to get going in 2024, with revenue falling 7% year-on-year (YoY) in January against a decline of 3.5% last year.
From the high growth rates seen during the pandemic, e-commerce revenue decreased by 10% YoY in 2022 and 3% YoY in 2023, with IMRG forecasting 0% YoY growth in 2024. The rates of growth in the post-Christmas period have been markedly lower than those seen last year, with big declines recorded even against the previous year’s big declines, according to the report, which tracks the online sales of over 200 retailers. For example, the payday week (w/c January 21, 2024) saw a decline of 9.4% YoY against 11.1% for the same week in 2023. The 7% drop for January is the second lowest since the skewed lockdown comparison period in early 2022, with only December 2022 (which was impacted by Royal Mail strikes) seeing lower growth (9.3% YoY).
Andy Mulcahy, strategy and insight director at IMRG, said, “Up until around 2019 e-commerce was rightly regarded as an industry with high potential, buoyed by the notion that everything was going online and the high street seemed in terminal decline. Around that time though, the overall growth rate for e-commerce had actually started to head toward flat. The lockdown period then gave us years of data that was heavily skewed, but what we are seeing now is not just a consequence of that anymore. The economic situation is dire, demand has been impacted and e-commerce feels like it is no longer immune to tough times but is just as vulnerable as retail more generally and other customer-facing industries.
“However: a possible bright spot on the horizon. While the economic and geopolitical context is fraught and potentially intensifying, e-commerce has traditionally benefited when technology progresses; new devices, such as the tablet and smartphone, helped push up sales by increasing accessibility to retail sites. Many of the ‘next big thing’ technologies in recent years – such as voice, augmented reality and the metaverse – have not delivered for retail yet, but AI has come on profoundly in the last 12 months. As it becomes widely embedded in platforms and systems, the breadth and quality of personalization it enables may well be what restores growth to e-commerce. It certainly seems like we can’t rely on stability in the macro environment to provide it.”
The index has been tracking online retail sales for over 200 multichannel and online-only retailers across multiple product categories since 2000. In 2023, the overall sample of revenue in the index was over £25bn (US$31bn).
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