New figures from the IMRG Capgemini e-Retail Sales Index reveal that the online retail market grew by 16% year-on-year in May and by 5% on April 2013. The results are particularly impressive as they follow strong sales over the Golden Jubilee during the same period last year.
Conversion rates soared to 4.9% (excluding travel) in May, up 20% compared to the same month in 2012 and 2011.
This coincided with a fall in average basket value, which excluding travel, stood at £77 from January to May 2013, down from £83 and £86 for the same period in 2012 and 2011 respectively.
This could be attributed to savvy shoppers searching for bargains online, and once a bargain is found, are more likely to purchase – boosting sales while reducing average basket value.
In terms of individual sectors, clothing saw 16% year-on-year growth in May, as the increase in temperature encouraged consumers to update summer wardrobes. The warmer weather also spurred Brits to splash out on purchases for the house; the Home and Garden sector saw a 41% increase in like-for-like sales last month, compared to the same time last year.
The figures reveal that online-only retailers outperformed their multichannel counterparts. Online retailers saw sales rise by 18% year-on-year in May, while retailers which have both a physical and online presence recorded a 16% rise. This suggests increased confidence among consumers in the internet as a transaction medium, and is a result of the increased adoption of technologies and services (tablets, PayPal) introduced by online retailers.
The M-Commerce Index recorded a year-on-year growth of 148% in May. While this is indeed strong, it is the lowest annual growth since the Index began.
Tina Spooner, Chief Information Officer at IMRG: “Due to the ease with which customers can browse between retail sites in search of the right offer for them, pricing has become more competitive than ever. While the online retail market continues to grow at a faster-than-expected rate, customers are spending less per transaction which impacts on the profit margins for the business. In fact, the average online basket value year-to-date is down over 10% compared with the same period in 2011. This declining trend is not likely to shoot up again quickly, as the expectation of value goes hand-in-hand with shopping online.”
Chris Webster, VP, Head of Retail Consulting and Technology at Capgemini: “The online sales reflect the ongoing economic climate. Whilst there has been a slight growth in average earnings, it is still running behind the current rate of inflation of 2.4%; as a result Brits have to be savvier shoppers and embrace the savings that can be found online.
“The challenge to the high street is that once shoppers get used to the convenience of online and the ability to make their money go further, this behaviour will continue even as health is restored to the economy.”
Oliver Ripley, Mobile Product Manager, eCommera comments: “The holy grail of mobile digital commerce is a high conversion ratio. A high conversion ratio shows that digital vendors have designed their mobile services in such a way to encourage mobile shopping and repeat purchase. Looking at conversion ratio the first five months of 2012 versus the same period in 2013, the average ratio has increased from 1.4% to 2.16% which shows that more and more investment is going to optimising digital retail services for mobile users. It seems that mobile commerce conversion ratios are now very nearly at parity with desktop commerce conversion ratios.”