How has the cost of living crisis affected eCommerce sales?
The UK is certainly going through it financially at the moment, and I'm sure no one has missed the additional energy price increase this month. According to a parliament briefing, the price increases we've seen are by far the largest ever, from records going back more than 50 years. Everyone's finding money is tight at the moment, and many feel the cost of living crisis will have a greater impact on households and businesses than the pandemic. So what's been the effect so far, and what might we expect for the near future?
The UK has one of the most established eCommerce markets in the world, with over 24k eCommerce businesses started in 2021 alone. Industry sales have always shown solid year-on-year growth going from 2.5% of total retail sales in the mid 2000's, to nearly 33% at Christmas last year. According to a report published by eDesk, businesses are optimistic about future sales despite the cost of living crisis, but sales figures from over the summer show a very marked downturn compared to what's typical looking at previous years.
What does the eDesk report say?
Charged retail have published details on the eDesk report, and it says that item cost has increased 24% in the last 6 months, with 54% of sellers planning to increase prices again over the next 6 months. 80% of sellers believe a recession is coming, but 71% are still optimistic about the current state of the eCommerce market.
What are the actual eCommerce sales figures?
The Office for National Statistics regularly publishes a wide range of stats for all kinds of things. Something of interest to us is the graph showing internet sales as a percentage of total retail sales. At the time of this blog, the last published figure is for August 2022.
Typically we see a significant upturn in sales during November in the run-up to Christmas, and you can see a clear peak here each year. That's if you disregard the very non standard sales during the pandemic. Also between the Christmas peaks the graph tends to level off, or increase slightly. That's pretty typical, with an average yearly increase of about 1.4%.
However, looking at the graph from the peak for Christmas 2021, it plummets well below the norm, losing 6%, or over 4 years of growth where normally it would remain relatively unchanged. This is a clear reflection of people's reaction to the cost of living crisis, and shows apprehension over financial security during the winter months.
While I can't pretend to know the future, I think that we'll definitely see a significant upturn in sales through November up until Chistmas. People may well also loosen their purse strings as they begin to see just how much the increase in energy cost actually affects them. Any positive news about the economy will likely also drive higher sales, helping people to feel more positive about the future.
Now's the time to buckle up and really push those Christmas sales to get people buying and the profits coming in over the festive season. You might have to work harder than in other years, but history tells us that our country will always rally when we need to. Regardless of the current financial climate, people won't want to lose out on a great Chistmas - so give people the right products at the right price, and I believe you'll see the sales you need to keep your business strong.