PALO ALTO, Calif., Jan. 18, 2024 (GLOBE NEWSWIRE) -- CommerceIQ, the leading retail ecommerce management (“REM”) platform, today released its annual State of Retail Ecommerce Report for 2023, which found that retail media advertising spending on Amazon soared 31% versus 2022, with steady gains seen throughout the year.
In addition, the report found that ordered revenue increased 7.2% year-over-year, even though ordered units slipped slightly (0.5%) during the same period. This was due to a 7.7% increase in average selling price (ASP), partly driven by double-digit pricing increases in the grocery category (up 16.4%).
Among other findings in the 2023 State of Retail Ecommerce Report:
- Overall, brands are facing incredible headwinds. The degradation in return on ad spend (ROAS) correlates with a consistent decrease in gross margins month-over-month, which started with a gross margin decline of 1.4% in January 2023 versus 2022 and spiked at 10.5% in December 2023 versus 2022. The gross margin decline correlates with an increase in ASP, and a minor increase in discount frequency. This likely indicates that the cost of goods sold (COGS) has increased dramatically, either due to increased unit costs or consumer behavior shifting spend to less profitable items such as bundle deals and large format packs.
- Sponsored Display and Sponsored Product advertising were the formats that saw the largest growth in 2023. For example, in June (leading into Prime Day 2023), brands increased sponsored display advertising by 116% compared to 2022. Sponsored Brand ad spending didn't fare as well, showing decreases in each of the first eight months of the year, although it rebounded with double-digit gains in the year's final four months.
- Tools & Home Improvement, Patio Lawn & Garden, Health & Personal Care and Pet Products are the most competitive categories entering into 2024, with brands in these categories increasing ad spend while glance views (traffic to product detail pages) declined year over year.
- Brands benefited heavily from Amazon's Subscribe & Save feature, with ordered revenue jumping 50% versus 2022. Amazon Prime Day and back-to-school shopping helped generate huge Subscribe & Save gains during the summer months, with revenue up 85% in June and 95% in July.
Data in the State of Retail Ecommerce Report is based on a compilation of anonymized data from the CommerceIQ REM Platform, which handles tens of billions of sales from global consumer brands that sell on retail ecommerce channels such as Amazon, Walmart.com and Instacart.
"There are many insights to be drawn from this year's report, but it’s clear that brands still face incredible headwinds going into 2024," said Guru Hariharan, CEO of CommerceIQ. "For example, the grocery category increased ordered revenue by roughly 5%, but pricing was up more than 16%, which raises questions about how sustainable the growth truly is. Overall we have seen gross margins fall by upwards of 10% in December 2023, which amidst rising prices can only mean brands are facing an increase in COGS that they haven’t been able to offset. Brands will need to focus on the fundamentals of meticulous inventory management integrated with their advertising strategies, and adopting new technological advancements like incremental advertising optimization that will allow them to drive growth without increasing ad spend.”
For more information, download a full copy of the 2023 State of Retail Ecommerce Report.
About CommerceIQ
CommerceIQ is the leading retail ecommerce management (REM) platform for consumer brands to plan, monitor and execute their businesses and profitably grow market share across 650+ global online retailers. CommerceIQ’s unified REM platform brings together every aspect of a brand’s retail ecommerce business: sales and operations, retail media management, content management, and digital shelf optimization, to create a single source of truth. CommerceIQ’s machine learning and automation enable brands to connect organizational silos, power team efficiencies, and drive measurable sales impact. More than 2,200 brands globally, including Nestle, Colgate, and Whirlpool, trust CommerceIQ to manage and grow their retail ecommerce businesses across global retailers including Amazon, Walmart, and Instacart. For more information, visit https://www.commerceiq.ai.
BOCA Communications for CommerceIQ
CommerceIQ@bocacommunications.com
