The year got off to a very slow start for ecommerce sales, with online revenue falling -7% YoY in January against a decline of -3.5% last year, according to the IMRG Online Retail Index, which tracks the online sales of over 200 retailers.
While that is not the sharpest rate of decline in the history of the index – February 2022 was down -29.6% – the drop back then was a consequence of the huge growth recorded during the lockdowns of 2020/21, so the YoY comparison was skewed rather than it being a reflection of low demand. In January 2024, demand felt very weak.
Since the high growth rates seen during the pandemic, ecommerce revenue declined -10% YoY in 2022 and -3% YoY in 2023, with IMRG forecasting 0% YoY growth in 2024.
Moving into the post-Christmas period, the 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 payday week (commencing 21st January) 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).
Several categories recorded poor growth online, including home (-5.7% YoY).
Andy Mulcahy, strategy and insight director at IMRG, says: “Up until around 2019 ecommerce 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 ecommerce 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 ecommerce 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, ecommerce 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, AR 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 ecommerce. It certainly seems like we can’t rely on stability in the macro environment to provide it.”
