The State of Retail Ecommerce: Q1 2024 Recap
CommerceIQ, the leading retail ecommerce management (“REM”) platform, today released its State of Retail Ecommerce Report for Q1 2024, which saw a 9.5% increase in ordered revenue year-over-year for the first quarter of 2024. This growth was primarily driven by a 10.4% increase in ordered units, offsetting a fall in price levels of -0.9%.
The report also found a 7.4% decrease in gross margins, likely due to rising Costs of Goods Sold (COGS) and increased discounting, alongside a $0.40 drop in return on advertising spend (ROAS) year-over-year. These point to the continued profitability challenges facing retail ecommerce businesses.
Among other findings in the State of Retail Ecommerce Report for Q1 2024:
- Based on CommerceIQ’s data, Q1 US online revenue grew quarter over quarter – specifically driven by an increase in units ordered by shoppers of 10.4% as price levels fell by 0.9%.
- CommerceIQ observed a compression of gross margins, decreasing by 7.4% Year over Year. The decrease in price levels is not enough to explain this, likely indicating rising costs as a key driver of the margin compression. Every single category saw a decline in gross margins.
- Year-over-year, inventory levels rose by 10.4%, which is a reversal of 2023 which saw a decline in inventory levels. Amazon’s growth in free cash flow may slow in Q1 as compared to previous quarters as a result of this.
- Retail Media ad spending increased by 2.5% in Q1 2024, well behind the 30.8% growth in 2023 vs 2022.
All figures are Year-over-Year Growth of Q1 2024 vs Q1 2023.
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.
“The headwinds on profitability are continuing for brands going into Q2” says Guru Hariharan, CEO of CommerceIQ. “While there are some positive signals with improving consumer demand, both gross margins and return on ad spend have fallen, forcing brands to look at other cost efficiencies to continue overall profitable growth going into subsequent quarters.”
For more information, download a full copy of the State of Retail Ecommerce Report for Q1 2024.
