Online sales got off to a slow start in January across most product categories.
The latest Online Retail Index from IMRG showed that the online market declined by 7% year on year in January, against a decline of only half that (3.5%) last year.
The analyst also speculated that January looked like a “contender for the weakest-ever e-commerce month”.
IMRG tracks over 200 multichannel and online-only retailers and pointed that while this was not the sharpest rate of decline in the index’s history – that was February 2022 at -29.6% – that figure was skewed as a result of the huge growth recorded in online sales after the Covid lockdowns of 2020/21.
IMRG reported that demand in January “felt very weak” and after a year-on-year decline in e-commerce of 10% in 2023, and 3% in 2023, it is forecasting zero growth for 2024.
Post-Christmas, IMRG said the rate of growth was markedly lower than the previous year, with payday week (commencing January 21) seeing a decline of 9.4%, compared with a drop of 11.1% in the same week the year before.
The 7% drop in January is the second lowest since the skewed lockdown period in early 2022. Only December 2022, at -9.3%, saw lower growth.
Electricals were among the categories to record poor online growth, down 8.8% year on year, with home improvements also flagging at -2.9%, furniture at -4.2%. The gardens sector, however, grew 9.2%
Commenting on the latest figures, 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.”
Striking a more optimistic note, Mulcahy added: “However, there is 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 past 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.”