When a sales report is titled “January a contender for weakest-ever e-commerce month”, you know it’s going to be bad. And so it was with the latest IMRG Online Retail Index that said 2024 has got off to a “very slow” start for online sales.
How bad was it? Online revenue fell 7% against the previous January, the fall coming on top of a 3.5% drop this time last year.
The index, which tracks the online sales of over 200 retailers, didn’t come up with its worst-ever figure. That was February 2022, which was down 29.6% but was skewed by the impact of the e-commerce boom due to lockdowns in the previous year.
But regardless of that, IMRG said that “in January 2024, demand felt very weak”.
Since the boom days of the pandemic, e-commerce revenue declined 10% in 2022 and 3% in 2023 as a whole, with IMRG forecasting only flat sales this year.
That comes after January’s rates of growth “have been markedly lower than those seen last year, with big declines even recorded against big declines from the previous year”.
The usually strong payday week (the seven days starting 21 January) even saw a decline of 9.4% against an 11.1% drop for the same week in 2023. And the 7% drop for January is the second-worst since the skewed lockdown comparison period in early 2022, with only December 2022 (which was impacted by Royal Mail strikes) seeing lower figures.
Does the news get any better from there? Unfortunately no. Among several categories that recorded poor growth online this time was clothing that fell 10.8%, wider that the overall e-tail market decline.
Interestingly though, garden was was up 9.2% in what’s not exactly a big month for gardening (but was probably boosted the mild temperatures). And health & beauty was up 9.1%. But IMRG said “that category is proving the exception; unlike the other ones, it has not experienced any negative growth for a whole month since June 2023”.
Andy Mulcahy, Strategy and Insight Director at IMRG, added: “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.”
But he also highlighted “a possible bright spot on the horizon”. He said that despite tough economic times, “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 personalisation 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.”