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The State of the Ecommerce Market: It’s tough out there

Andy Cockburn
By Andy Cockburn — September 6, 2023 -

Read time: 2 mins

Negative news headlines about the economy are everywhere, but it can be really hard to know their implications for your business. In most cases, investors are still keeping up the pressure and targets remain the same, so performance tailing off makes everyone inside the business feel like they’re failing. 

If you’re good at your job, you’ll take pride in owning the results you deliver, no matter the economy. That’s a fabulous characteristic, but it’s also stress-inducing. You’re under intense pressure without truly understanding how you’re doing against the market. You’d have to be superhuman to not let that get to you and start questioning yourself.

Over the last year, I’ve seen this dynamic play out time and time again in conversation with clients (and with B2B peers feeling the impact of B2C slowing down).

What helps in this situation is data that gives perspective and context. That’s where I hope that I can help.

 

Putting things into perspective

At Mention Me, we’re privileged to act as a data processor for 500 brands globally (many in the UK where we started), tracking orders through clients’ sites to reward successful referrers. While we only use this data to track referral, it means we can also aggregate abstracted and anonymised data to understand what’s happening in the market.

We’ve been tracking this data in detail for the last 9 months, so when I meet up with CEOs and CMOs I share what we’re seeing across the ecommerce and retail space. And when I share the bigger picture, the relief is palpable. You can almost see the weight being lifted from their shoulders.

The data shows people in black and white that it’s not just them. That the high inflation (and now high interest rates) means consumers are spending less. It’s not just a theory; it’s a reality hitting almost every B2C business. 

Having seen enough business leaders react in this way, I thought it’d be helpful to share these insights more widely. Because goodness knows when you’re managing the challenges of a downturn like this, the last thing you need is self-doubt added into the mix.

So, to the data.

 

Change in order volumes year on year

To see the change in orders for our clients year on year, we take the order volume from the last six months and compare it to the same six month period a year ago. We look at change in volume rather than change in revenue because we want to see the change in activity without the influence of inflationary price changes.

In this chart, each purple bar represents one business. Any purple bar to the left of the red dotted line is growing (in terms of order volume). Anything to the right of the red dotted bar is shrinking. 

The headline stats are:

  • Only 41% of the businesses are growing; 59% are shrinking year on year
  • 23% of the businesses are shrinking by more than 25%

So if you’re a B2C business growing by 10% year-on-year, it may not be the growth you’re used to – or that investors want – but you’re still winning in the market.

If you’re shrinking by 25%, that’s a really hard place to be – but you’re not alone. The market is brutal and there are many, many other businesses experiencing similar right now.

And this has been the case since we started this tracking in November, with Q1 a particularly rough time. Q2 has been a lot better, but we’re not yet seeing a sustained improvement month on month that would mean we’re on our way out of this.

So, things are rough out there. Go easy on yourself and carry on working through the challenges. The long period of growth we’ve all come out from makes this downturn feel particularly gruelling, but it’s just part of the economic cycle. We will get through it. And we will all be stronger and more resilient for doing so.

And it would be remiss of me to end without mentioning that if you’re struggling in these times, then we can help by finding and activating your advocates – those customers willing to spread the word and grow your business for you. Organic growth is key in these times and many businesses have a major opportunity to rebalance towards organic growth by asking for more referrals and advocacy from customers.

Our annual conference Advocacy Live is in London on Sept 19th and if you’d like to hear more, we’d love to see you there. 

Register today

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