Tough trading conditions continued into the new year for e-commerce, with total market online retail experiencing a 2.2% year-on-year decline against weak figures in the same period last year.
The latest IMRG Online Retail Index, which tracks online sales for 200 retailers, also showed a sharper-than-usual month-on-month decline, with revenue plummeting 28.7% against December.
The research notes that growth in consumer traffic to online retail sites was often positive during 2022, albeit marginally, but that too has now declined for a few months running, down 5.2% year-on-year in January, with some categories faring better than others.
Inflation is also evident in the figures, with the total market average basket value increasing from £113 in January 2022 to £130 in January this year. Meanwhile, the data suggests retailers are struggling to get their customers to convert at the same rate as before the cost-of-living crisis started to bite. While the average conversion rate for total sessions remained roughly flat against January 2022 (around 3.2%), it is substantially down against two years ago in January 2021 when it was 4.1%.
Looking at product categories, online gift sales continued to be tough, with a 16.1% decline in January, whilst clothing slipped 4.5%. A stand-out performer this month was a subcategory of home & garden, gardening, which saw online growth of 43.8%.
Andy Mulcahy, strategy and insight director at IMRG, commented: “These disappointing, though not entirely unexpected, revenue and conversion rate results are in line with IMRG’s 2023 forecast for online retail, which expects YoY declines in total market revenue (-3%).
“However, shopper confidence is the key. If there are any notable improvements in the economic situation, we should see that conversion rate nudge up again as people feel a bit more secure in their financial situation, so can spend out on more discretionary purchases. From January’s results however, it feels little way off yet.”
