Following the close of Q2, e-commerce has seen stagnating growth across much of the industry — but that may not be cause for concern.
Major players in online sales, like Walmart, saw a hugely successful second quarter, but that success isn’t being replicated by some other key retailers.
According to the Department of Commerce, Q2 e-commerce sales increased 2.7% to $257.3 billion since Q1 2022. Currently, year-to-date growth appears to be slowing as compared to the dramatic rise seen during the height of the pandemic.
Mark Mathews, vice president of research development and industry analysis for the National Retail Federation, spoke with FreightWaves about the results.
“What we saw was a leveling off,” Mathews said. “Last year, 2021, for the first time in a long time, we actually saw negative growth in e-commerce.”
After across-the-board increases in online sales during the height of the pandemic, retailers are seeing dramatically different results at the end of Q2.
- Walmart reported a 12% and 18% e-commerce growth on a two-year stack.
- Target reported continuing growth in digital sales at 9%.
- Best Buy reported a 28% decrease in online sales.
- E-retailer Wayfair reported a 24.1% decrease in its active consumer base.
- Amazon reported its second straight quarterly decrease in online retail sales at 4.3%.
Shopify is among the hardest hit by the fluctuations, reporting its plan to lay off 10% of its workforce, resulting in a 3-cent loss per share.
“People are building their businesses and ordering inventory based on current behavior, but it takes awhile for that to happen,” Mathews said. “Suddenly you’re six to nine months out and behavior has changed.”
Mathews said Shopfiy’s fall is not an indicator for the future of online shopping.
“Retail is a highly dynamic, highly competitive industry, and catering to changes in consumer behavior is critical, because consumer behavior is always changing.”
According to Mathews, consumer behavior can favor online shopping when inflation creates an incentive to find lower-cost retailers for everyday items.
“The most effective way of broadening your shopping basket is to focus on the online component, because when you go to a store, that’s your universe right there. When you’re sitting at your computer … your universe is basically every store in the country.”
The future of e-commerce is uncertain.
“If we continue to see strong growth in retail, continued spending in retail, that’s going to be quite positive. But if we see economic conditions flowing, inflation continuing to be high, and at the same time, we see consumers switch back to services, that could be challenging for the industry,” Mathews said.