Bloomreach Commerce Pulse: E-Commerce Is Not Immune to the Economy’s Ills This January
By Brian Walker
Feb 17, 2022
Bloomreach Commerce Pulse: E-Commerce Is Not Immune to the Economy’s Ills This January
Table of Contents
Note: Our Bloomreach Commerce Pulse monthly articles explore the most interesting Bloomreach Commerce Pulse results and provide key insights for e-commerce professionals and industry observers looking to benchmark and understand what is happening in the market. They reveal current trends and help businesses to fully understand the digital commerce marketplace.
In commerce, we tend to expect the months following holiday highs to pale in comparison. In that sense, January 2022 performed normally, but the post-holiday doldrums were compounded by the effects of negative consumer sentiment.
Before we examine our own data, it’s important to give context surrounding the change in consumer sentiment and buying patterns. The University of Michigan’s Surveys of Consumers reports that consumer sentiment has dropped nearly 15% year-over-year (YoY), which is a -4.8% change from December of 2021. Most likely, this is a result of inflation and the Omicron variant of COVID-19 creating stress and uncertainty for shoppers.
As for Bloomreach’s data, it tells a similar story of waning consumer confidence and tapered spending. In January 2022, we saw Bloomreach Commerce Pulse sales dip by 6.5% YoY in North America and 8.4% in the European Union. Interestingly, average order size (AOS) is up by 15% YoY and 37% month-over-month (MoM) in North America. This is most likely because brands have less-than-expected holiday excess stock (and therefore less post-holiday sales) as well as increased supply chain and operating costs leading to higher merchandise prices.
Though average order size may be trending positively, this doesn’t bode well for other commerce metrics across North America and the EU, as rising costs tend to decrease consumer spending. Let’s explore the more granular data from Bloomreach Commerce Pulse in January 2022.
In North America, Bloomreach customers saw e-commerce traffic dip 17% both month-over-month and year-over-year in January. While a month-over-month decrease is to be expected after the holiday season, a significant year-over-year change is not. This could be a result of the economic context I addressed above: High inflation and Omicron variant concerns have led consumers to feel less secure, and therefore they aren’t looking to purchase a ton online.
In the same vein, e-commerce sales are down 6.58% YoY and conversion rate is down 0.81% YoY for January. The sole metric on the rise both YoY and MoM for the North American region this month is average order size, with AOS up 37.44% MoM and 15.98% YoY. This increase, combined with the fact that conversion rates aren’t performing well, leads us to conclude that there are fewer eager-to-shop customers who are being met with higher prices. So, they aren’t buying every time they browse, but when they do have to, it’s costing them more than before.
It will be interesting to see if February and beyond see these numbers shift as North America nears the downswing of the Omicron surge — or if supply chain issues, higher business costs, and inflation woes will continue to keep shoppers frugal.
Europe and UK
Unsurprisingly, Europe and the United Kingdom see nearly identical trends to North America for the month of January. The new year saw e-commerce sales across the Bloomreach customer base down 8.40% YoY and 18.60% MoM. Traffic was also down 11.19% YoY — so again, we see that shoppers are out searching less and buying less. But as in North America, higher average order sizes were boosted. This is likely a result of fewer promotions and price increases due to inflationary pressure on inventory, logistics, and labor costs, which had a positive impact on overall sales results.
Average Order Size Driving Results Across Categories
For January, a few of our customer categories stuck out in terms of performance in an otherwise so-so month. Apparel sales were up 11.18% YoY, luxury sales were up 32% YoY, and home furnishings saw a 14% increase in sales YoY.
But, growth across these categories was also tempered by other less than stellar metrics: Apparel traffic was down 4.82% YoY and conversion rate is stagnated at -1.74% YoY. Conversely, average order size was up for apparel at 19.36% growth YoY — signaling again that growth in the category is being fueled by higher prices. In addition, there was less excess product from the holiday season this year, which means brands have shied away from heavy promotions and sales.
Luxury fared very similarly to apparel in January — with the exception of traffic being up 35.88% YoY and average order size down a modest 2.10% YoY.
Home furnishings have continued to compound upon the growth it saw last year, with sales up 14% YoY, average order size up 19.18% YoY, and conversion rate up a staggering 79.67% YoY. As we near the end of the Omicron wave and folks get back to work, they maybe be searching for fewer at-home products than before (traffic was down 46.79% YoY), but the hybrid work model means there are still shoppers looking to invest in their at-home spaces (though half as many are shopping this year versus last year).
General Merchandise and Home Improvement See a Lackluster Month
There has been some consumer pullback in spending compared to last year — with traffic down 17.39% YoY and sales down 6.58% YoY in North America. This may mean that consumers are spending more time browsing in-store as COVID concerns ease, but more likely they’re spending less due to reduced consumer confidence.
Both general merchandise and home improvement experienced a difficult January. For general merchandise, traffic was down 14.12% YoY, sales were down 36.23% YoY, and conversion rate was down 37.01% YoY, while average order size was up 17.88% YoY — pointing again to consumers being wary of spending, but when they do purchase they’re spending more on average due to increasing product prices.
For home improvement, traffic was down 22.10% YoY, sales were down 30.97% YoY, and conversion rate was down 39.12% YoY. Similarly to general merchandise, average order size was up by a staggering 45.56% YoY — which could either be due to rising costs or consumers making big purchases on items like appliances. This could also point to an end of “nesting” for consumers, who are spending less time at home, so they’re investing less on big home improvement projects.
Grocery Growth Has Plateaued, but Not Dropped
While we have seen unprecedented growth in online grocery over the last two years due to the COVID-19 pandemic, things have started to plateau for the category. But that doesn’t mean the industry is going down any time soon.
We’re seeing the category stabilize after a period of staggering growth, which is a really great sign that online grocery has successfully scaled and is able to keep up with consumer demand — and that market penetration is sustainable.
Traffic is up 18.63% YoY, which tells us that more shoppers are continuing to flock to online grocery even in a post-lockdown world.
Average order size has increased by a very modest 2.97% YoY and conversion has dropped by 18.39% YoY — which most likely means customers were paying more for their groceries and that they might’ve abandoned browsing sessions when they couldn’t find the products they were looking for.
B2B Is on the Rebound
While we’ve mainly focused our attention on year-over-year metrics given the context that B2C businesses were riding high to due holiday sales in previous months, B2B doesn’t have that holiday advantage and has seen impressive growth in the last month. B2B sales were up 46.79% YoY and 24.20% MoM in January, signaling a true rebound for B2B after years of struggling from the effects of WFH.
And while increased average order size due to inflated prices (+43.96% YoY) may play some role in the positive results, these are exciting numbers overall. In January, B2B saw:
- Traffic up 21.55% MoM and 20.71% YoY
- Sales up 24.20% MoM and 46.79% YoY
- Average order size up 17.40% MoM and 43.96% YoY
Interested in More Insights and Trends?
Join us for our next Commerce Pulse Quarterly roundtable to discover the shifts in consumer behavior and purchase patterns in digital commerce. Register for the virtual event here.
Bloomreach is the world’s #1 Commerce Experience Cloud, empowering brands to deliver customer journeys so personalized, they feel like magic. It offers a suite of products that drive true personalization and digital commerce growth, including: Discovery, offering AI-driven search and merchandising; Content, offering a headless CMS; and Engagement, offering a leading CDP and marketing automation solutions. Together, these solutions combine the power of unified customer and product data with the speed and scale of AI-optimization, enabling revenue-driving digital commerce experiences that convert on any channel and every journey. Bloomreach serves over 850 global brands including Albertsons, Bosch, Puma, FC Bayern München, and Marks & Spencer.