Commerce Pulse Quarterly Insights on E-Commerce Trends
Uneven Results and the Importance of Customer-centric Initiatives
What Is Commerce Pulse?
For those who are joining us here for the first time, Commerce Pulse is a quarterly event that highlights data we gather from hundreds of brands and retailers around the world. From this data, we're able to glean insight into the state of commerce today and into what we can expect in the future.
If you missed the event, you can still watch the recording on demand, or keep reading for a recap of the highlights.
Holidays Trends
Weathering the Storm of Inflation
We recently held our Commerce Pulse Holiday 2022 event, where Brian Walker, Bloomreach’s Chief Strategy Officer, spoke in detail about consumer behaviors and e-commerce trends in Q4 2022, plus 2022 as a whole. If you missed the event, you can still watch the recording on demand, or keep reading for a recap of the highlights.
Inflation Is Impacting Consumer Confidence
To nobody’s surprise, inflation and the overall economic environment significantly impacted consumer confidence in the last quarter of 2022. What was surprising, though, was that Europe still saw strong sales results during the holiday season, with a 9% sales bump year-over-year (YoY).
Brian Walker also pointed out that the slightly lower sales in the US might have been a result of holiday promotions. “It’s important to recognize that there was a heavier level of discounting going on during the holiday season,” said Brian. “That impacts sales because obviously you’re ringing up products at a lower price point, which is reflected in the sales numbers.”
The Data: Holiday Season, YoY (2022 vs 2021)
Holiday Season: October 1 – December 15
There was also another contributing factor to the lower sales in North America during the holidays. “In late Q3, early Q4 period, sales were remaining pretty strong,” added Brian. “I think a lot of consumers were getting their holiday shopping lists done early.”
Breaking Down the Data by Industry
In Q4, the industry-level data shows some pretty mixed results.
Here are some of the key takeaways from Commerce Pulse Holiday 2022:
Luxury
“Luxury is a category that really had a phenomenal 2022 overall,” stated Brian. One of the big reasons for this is that upper income brackets aren’t as impacted by the economic situation. Another contributing factor is that the return of holiday traditions such as office parties, Christmas parties, weddings, and more drive luxury consumption.
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Apparel
“In the context of inflation, it was a rough holiday period for apparel,” said Brian. “But it’s interesting to see that traffic was up 6%, so it’s kind of a mixed bag.”
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Home Furnishings & Home Improvements
“It’s great to see that home furnishings has held pretty strong throughout 2022 after a tremendous surge in 2021,” said Brian. There may not have been as much growth as people had anticipated earlier in the year, but that’s largely due to inflation and heavy discounting.
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Don’t Forget About the People Behind B2B
On the B2B side, Brian previously explained that due to “post-pandemic reopening of institutions, travels, and factories that all need those supplies and that are transacting with businesses online more now than ever before.” However, there are still improvements to be made here, as online B2B businesses often forget that they’re not selling to organizations, but to the people working in those organizations. B2B brands now need to build more intuitive online buying journeys to adapt to the consumers they have on the other side of the screen. Automation can help here, as automating low-value tasks can allow B2B employees to focus more on relationship-building activities.
2021 VS 2022
“B2B clearly was very strong overall in 2022, and that reflects the opening up of the overall economy,” stated Brian. “B2B did struggle online to some degree during the pandemic, so with sales up over 20% year over year, it shows that it’s coming back.”
“It’s also important to note the traffic was up almost 30% year over year,” added Brian. “This shows that digital channels play a more and more important role, as the B2B buyer leverages the most convenient tools to get their jobs done as fast as possible.”
The conversion rate for B2B dropped significantly, though, and Brian chalks this up to the B2B buyer being less loyal than they used to be. “They have the tools now to shop around to find the products they need at the price points they’re looking for,” said Brian.
The higher average order size also shows that digital is no longer a barrier in the mindset of the B2B buyers as they purchase higher price point items online.
Looking Ahead to 2023 (and beyond)
The speakers also identified four factors that can help determine your main focus areas for the coming quarters:
Rebalancing inventories will be a key focus
Consumer credit (“buy now, pay later”) will likely reach an all-time high, which can impact retailers
Mobile will continue to grow in importance as consumers increasingly turn to their phones for product discovery and shopping
The Future Is Mobile: Why Mobile Marketing Is Here To Stay →
Fall Trends
The Rise of Promotions and Sales
We recently held our Commerce Pulse Fall 2022 event, where Brian Walker, Bloomreach’s Chief Strategy Officer, and Amy Eschliman, Managing Director of Retail Solutions at Google Cloud spoke in detail about consumer behaviors and e-commerce trends from Q3 2022. If you missed the event, you can still watch the recording on demand, or keep reading for a recap of the highlights.
Promotions Are Playing a Bigger Role
“Economic uncertainty is on top of consumers’ minds,” said Amy, which is a consistent theme from the previous quarter. However, there was a surprise surge in promotions and sales among retailers, likely because as they had to raise prices, they turned to offering promotions as a way to stimulate demand.
In fact, this is the first time we’ve seen search terms like “promotion,” “sale,” and “clearance” appear in the top 20 — in the past it was much lower.
Overall, the promotions seem to work better in North America than in the UK and EU, with sales numbers going up slightly in the former but dropping in the latter.
“We see the pressure of inflation on consumers,” said Brian. “And conversion rate numbers show that consumers are being very picky.”
Amy provided insights on search terms growth, such as "a 60% year-over-year growth for "Buy 1 - Get 1 Free" searches. Or 100% growth for promo codes for existing users. New consumers know they can get a deal, but older ones request them too." Pushing even more on the fact that "It's a strong signal that customers are looking for deals." said Brian.
The other search terms with high growth shared by Amy show that consumers are also focused on another field of expense, which is travel and experiences. Amy shared that Google Cloud is "now seeing a 90% growth in searches for "last minute flights" globally, or 70% growth for "day trips". And searches for "Restaurants open now" have grown globally 600%". Showcasing a return to exploration with the end of sanitary restrictions and people now being allowed to travel and go to their office. Amy also shared that "Back in April, we saw a 500% YoY increase in direction to work searches."
The Data: Q3 2022 (vs Q3 2021)
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While conversions were down across both North America and the UK and EU, North America saw a slight bump in sales and an unexpected jump in average order size (AOS).
Brian called the AOS growth “shocking,” but attributed it to potential factors such as stocking up for natural disasters in North America and geopolitical issues in Europe.
Breaking Down the Data by Industry
In Q3, the industry-level data shows some pretty up-and-down stats.
Here are some of the key takeaways from Commerce Pulse Fall 2022:
Grocery
Luxury
"Luxury sales and conversion numbers up shows that consumers of higher income brackets continue to spend" shared Brian. Despite continued spends, "it's also interesting to see that higher income demographics actually have a lower opinion of economic outlook than lower income demographics" according to Brian.
Apparel
Apparel took a bigger hit, with a slight increase in traffic but bigger drops in conversion rates and average order size.
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Home Furnishings & Home Improvements
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There were positives in a wide range of industries: Grocery saw a big bump in AOS, luxury saw an increase in traffic, and home improvement saw a healthy jump in conversion rate.
Don’t Forget About the People Behind B2B
On the B2B side, Brian previously explained that due to “post-pandemic reopening of institutions, travels, and factories that all need those supplies and that are transacting with businesses online more now than ever before.” However, there are still improvements to be made here, as online B2B businesses often forget that they’re not selling to organizations, but to the people working in those organizations. B2B brands now need to build more intuitive online buying journeys to adapt to the consumers they have on the other side of the screen. Automation can help here, as automating low-value tasks can allow B2B employees to focus more on relationship-building activities.
Meanwhile, B2B saw similar drops in conversion rates, but also saw sizeable increases in sales, traffic, and AOS.
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It’s clear that retailers need to meet consumers’ increasing demands for personalization if they want to be able to drive growth moving forward.
“In retail, change is constant,” said Amy. “You have to be as agile as possible to meet those changing demands.”
Brian echoed this sentiment: “The reality is, your digital channels are driving almost all of the demand now. That’s where they discover and engage.”
However, he also pointed out that there’s more to be done. “Retailers and brands have not invested in technology to the degree they probably needed to.”
While promotions and offers might get consumers through the virtual door, it might also lead to them pushing back at the moment of conversion (aka purchase) in hopes for even better promotions. By personalizing the experience for them, retailers can ensure that they actually make purchases (and come back for more).
Looking Ahead to Holiday Season (and Beyond)
The speakers also identified four factors that can help determine your main focus areas for the coming quarters:
The digital front door is THE front door of your business
Consumers feel a decline in disposable income in part due to inflation, energy costs and stock portfolio
The millennial generation expects more real-time service and self-service than any other demographics ever did before
Inventory being high, retailers will offer a lot of promotions, and consumers are being savy about this, this is why despite a lot of early promotions, consumers might push back the moment of their purchase, hoping for even better promotions
Summer Trends
Uneven Results and the Importance of Customer-centric Initiatives
We recently held our Commerce Pulse Summer 2022 event, where Brian Walker, Bloomreach’s Chief Strategy Officer, and Rich Berkman, the Global Leader of Digital Commerce at IBM iX, spoke in detail about consumer behaviors and digital commerce trends from Q2 2022.
Is the E-Commerce Boom Over?
There are a lot of people saying the e-commerce boom is over. While the e-commerce boom has evened out and slowed to more of a pre-pandemic growth rate, we need to be careful not to read too much into these numbers. We got kind of addicted to these massive growth numbers during the pandemic, and we need to put that into context as well.
It’s no surprise that traffic was down for most regions, but North America did have positive sales and conversion rates in Q2 over Q1, as well as a higher average order size increase compared with Europe and the UK.
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The Data: Q2 2022 (vs Q1 2022)
Overall, Brian and Rich described the state of digital commerce in Q2 as “lumpy,” owing in large part to worldwide issues such as the war in Ukraine, supply-chain shortages, and a strong inflation rate.
“In North America, consumer confidence is at an all-time low due to the poor economical news they're tuned in to,” said Brian.
In order to weather these rocky climes, the speakers advised businesses to focus on creating seamless e-commerce experiences so that customers can more easily trust brands on their capacity to deliver the right products, in time, and at the right place.
“Commerce & customer experience (CX) are the future of business” added Rich.
Breaking Down the Data by Industry
While the overall picture wasn’t particularly uplifting in Q2, the industry-level data shows a more up-and-down story. Here are some of the key takeaways from Commerce Pulse Summer 2022
Apparel & Luxury Clear Winners
Luxury
Apparel
Apparel and Luxury were the winners of the summer, with sales and average order size up quarter over quarter.
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Home Furnishings & Home Improvements took a hit
Home Furnishings and Home Improvements took a hit this quarter, with traffic and sales significantly down.
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Apart from Home Furnishings and Home Improvements, traffic was up this quarter and year over year in all categories, which Brian stated was led by “Europeans looking for product they clearly can't find due to lack of supplies due to the war in Ukraine.”
“Higher income consumers are still spending aggressively in high-value categories,” said Brian — despite the fact that retail prices have gone up 5-15%, sales are up for Apparel, Grocery, and Luxury both year-over-year and quarter-over-quarter.
Grocery remained pretty flat this quarter, showing that consumers are still turning to online grocery shopping, which makes sense given how many people are still working from home. However, there are still steps for this sector to reach its potential: “56% of consumers would be interested in a grocery subscription if it provided prices that were lower,” said Rich.
Grocery Remains Flat
At the same time, competition is harsh, especially in sectors such as Apparel and Luxury — “Expectations from customers are at an all-time high, and that means providing them with options on “where,” “when,” and “how” to transact across all the channels,” said Rich. His team at IBM iX has identified trust, relevance, and convenience as the three experience drivers in e-commerce.
Expectations from customers are at an all-time high, and that means providing them with options on where, when, and how to transact across all the channels
Customer loyalty is now lower due to the pandemic, which means brands need to turn to true personalization to create a valuable shopping experience for customers: “80% of US consumers say they want personalization from their retailers” added Brian.
Additionally, companies need to ensure their personalization is compliant with GDPR and other privacy laws around the world: “Data privacy shifted the way marketers need to be thinking about acquisition and retention and building a more sustainable model, especially with customer acquisition costs going through the roof” said Brian.
Don’t Forget About the People Behind B2B
On the B2B side, there was an overall boost to sales, which Brian explained was due to “post-pandemic reopening of institutions, travels, and factories that all need those supplies and that are transacting with businesses online more now than ever before.” However, there are still improvements to be made here, as online B2B businesses often forget that they’re not selling to organizations, but to the people working in those organizations.
“The customer profile has changed post-pandemic and B2B buyers, like B2C buyers, expect choice and a great online experience,” stated Rich. B2B brands now need to build more intuitive online buying journeys to adapt to the consumers they have on the other side of the screen. Automation can help here, as automating low-value tasks can allow B2B employees to focus more on relationship-building activities.
The B2B buyer journey needs to be completely refined and redesigned.
Rich Berkman
Global Leader of Digital Commerce at IBM iX
Additionally, Brian touched on how B2B prospects have also shifted their way of working and buying from their vendors: “B2B journeys have to be based on experience. Taking your prospects out golfing doesn't work anymore because competition is one click away and time is a major concern for B2B customers.”
To that end, B2B customers are also more likely to do research to find solutions that save them time. According to the State of Commerce Experience report, 58% of B2B buyers say they always or often research a product online before going to a physical store, and 43% will compare store prices with competitors online. As more B2B business shifts to digital channels, you need to focus on creating a seamless online experience for your customers if you want to keep them from bouncing to a competitor’s site.
Looking Ahead to Fall (and Beyond)
For companies that experienced a rockier (or even flat) summer, Brian and Rich recommend taking IBM iX’s three pillars to heart: trust, relevance, and convenience. In particular, brands need to put their main focus on the customer: “Companies should focus on putting the customer at the center of their commerce initiatives and of the journeys they’re building,” said Rich.
The speakers also identified three factors that can help determine whether companies survive and/or grow in the coming quarters:
Whether brands are accelerating or continuing to invest in their digital commerce capabilities
How quickly they can bring these new business models, experiences, and capabilities to reality
How stress-free they can make the customer experience — as Brian put it, “People are actually buying more gas right now than before inflation. But they're not buying it to go to work, they're buying it to go on road trips.”
Stay Ahead of the Curve With Commerce Pulse Quarterly
There were a lot more insights and learnings from the full webinar, so be sure to watch the on-demand version.
And if you want to stay in the know of what happens each quarter in the land of digital commerce, then sign up for our next Commerce Pulse event!
