A lot of businesses feel like they’re getting pounded after the relative eCommerce sunshine of the pandemic, so what on earth is going on? Here are my four hottest takes:
Targets were left too high, post-pandemic
Check out this graph published recently by the Office of National Statistics, which proves that we’re still on track for steady growth. It shows eCommerce sales as a percentage of total retail sales over time, going back to 2006 and up to September 2022.
As you’ll see, most 2022 targets were set during a pandemic, that's the enormous hockey-stick growth chunk of the line on the right of the graph. Such targets were set based on a once-in-a-lifetime anomalous high when the only way to buy anything was online. So here we are; teams are now being shouted at because they can’t deliver dependable growth, but their targets were set at the top of a (temporary) Mount Everest. It's scaling back down to a sustainable level, which isn't your eCommerce team's fault.
The macroeconomic impact is a nuclear bomb, not an “excuse”
On the battlefield of Retail, macroeconomics is the terrain. Many businesses consider it the eCommerce team’s job to roll with the punches and find new ways to sell regardless of the state of the battlefield. However, teams' growth is a lot to expect in the current climate. We are in an absolutely unprecedented time economically: Stagflation, global impacts on productivity, supply chain disruption and political chaos at home. Within the very short timeframes of most commercial targets (quarters or annually), macroeconomics will profoundly affect elastic products. Unless you’re selling food, fuel or fundamentals – it’s going to be rough for a bit.
Tracking reliability is taking a hit
To trade effectively, eCommerce teams need data. Most of this data comes from tracking, which is in a significant period of change. Most customers don’t want to be tracked and browsers are constantly providing new features to defeat it. Big Tech is also getting involved in preventing tracking: In November 2021, Apple introduced a feature in iOS 14 that allows users to turn off all tracking in one click. For eCom teams traditionally dependent on good reliable tracking, there's only one way out: "server-side" tracking. This is not simple to implement and maintain relative to GTM, so my first 2023 prediction is that we’ll mainly be doing server-side tracking projects all year.
Facebook is the worst, as usual
No matter how bad things get, you can always rely on Facebook to make it worse. Not only has their ad performance been impacted by the aforementioned tracking changes but Facebook itself is on the turn. After decades of unfettered growth, the company is hitting the “organic cap”, meaning there are no people left on the planet who want to use the site.
This has led Facebook to pursue new lines of business for investors (you can read my Metaverse rant here). It also prompted them to squeeze more cash from their existing advertising customers to show that profits continue to rise, irrespective of growth. They are doing this by limiting organic reach through their algorithm and forcing customers to make up the difference, at least in the short term, by spending more to boost their content.
This all may sound bleak, but trust me – it’s an opportunity. These factors will not continue forever and the economy will correct itself. Tracking will rally back. Facebook will go bust (sorry, I mean Facebook will stabilise its ad spend at a cost that makes sense for most brands' ROI).
Selling online is not going away and the retailers who can stay match-fit while their competitors are turning on themselves will be the ones who come out shining.
Look after your eCommerce team! You’re gonna need them.