Covid had decried the incredible (and forced) rebound of online sales and suggested the partial extinction of physical retail. The truth is that e-commerce is struggling today. And it probably didn’t see it coming
The truth of the “online” is that
Let’s face it. During the various lockdowns due to Covid, we all believed online sales would put traditional ‘physical‘ ones out of business because even those most recalcitrant to buying in front of a screen had to adapt. ‘The way of shopping has changed forever’, or ‘The physical shop’s years are numbered’ were almost deafening refrains. Nearly three years later, the scenario is different from what was predicted. People who were locked in their homes, once free, have flocked to the shops. And now that there is inflation and the supply chain is still disrupted, e-commerce is struggling.
E-commerce is struggling
Just look at the two global giants. In the third quarter of 2022, Amazon increased its sales by 15% compared to the same period of the previous year but reduced its profits by 9%. According to US media reports, it is preparing to cut about 10,000 jobs due to the slowdown in business and concerns about an economic recession. In the same quarter, Alibaba‘s sales increased by only 3% year-on-year, below analysts’ expectations.
For the first time, the Chinese digital giant decided to keep its final results private from Singles Day, saying the results were in line with last year.
The truth is that e-commerce is struggling
According to Salesforce data, in the third quarter of 2022, global online sales decreased by 2%, and orders fell by 4%. In the second quarter, the decline in revenue was 4 per cent and orders 8 per cent. In the July-September period, European online sales decreased by 9 per cent, with order volume dropping by 3 per cent. However, consumers spent more on fashion products, particularly footwear (+18%) and leather goods (+17%), while there was a significant drop in the toys & learnings (-22%) and home categories (-19%).
In Q3 2022, Farfetch posted its first decline since it went public, joining other e-commerce companies in the struggle to find an answer to the post-pandemic resurgence of physical retail. “Farfetch and other digital marketplaces have recently come under pressure from a combination of consumers returning to physical shops and inflation that has begun to eat into discretionary spending at the low end,” Luca Solca, an analyst at Bernstein, said in a note. Asos’ revenues increased by only 1 per cent, with a loss of nearly £32 million in the fiscal year ending 31 August. As a result, the British company will cut more than 100 jobs to reduce costs. At the root of the difficulties are supply chain disruptions, rising costs, and customers spending less due to the rising cost of living.
Zalando‘s sales grew by 2.9 per cent in the third quarter, thanks to an increase in active customers to over 50 million for the first time. The retailer expects its revenue to grow by a maximum of 3% for the entire year. Finally, a forecast from the US. According to data from Adobe Analytics, online Christmas sales in the US this year are expected to grow at the slowest pace since at least 2015, up just 2.5 per cent.