The state of retail ecommerce: Q2 2024 insights

July 11, 2024

The first half of 2024 presented a tipping point for brands that want to survive and thrive in the future of the industry. As marketplaces become more saturated, costs rise, and advertising strategies require more data and insights than ever to be successful, brands need smarter approaches to manage the ecommerce landscape.

That said, in this report we explore how brands spent much of Q2 preparing for Prime Day, putting their ad dollars where they’re predicting the most profits will surface during retail’s hottest week of the summer. Here’s what we learned:

As brands ready for Prime Day, the competition is heating up

Our data shows that advertising spend rose across categories, particularly in sponsored brand ads—as many brands are focusing on top-of-funnel tactics to increase consideration and build audiences ahead of Prime Day.

Traffic remained flat in Q2, possibly due to a shift in demand toward Prime Day in July. But despite flat or declining traffic, competition intensified as brands placed their bets on increased ad spending ahead of the retail event. In particular, the grocery category is experiencing favorable trends—with flat ad spend and growing sales; however, consistently improving Return on Ad Spend (ROAS) remains a challenge for the industry overall and across most individual categories.

And, while inventory levels increased across verticals, revenue losses due to out-of-stock (OOS) issues did not necessarily decrease alongside them; in fact, revenue losses due to OOS often accompanied that inventory growth, likely due to misaligned demand forecasting.

Pricing & promotions are paramount to win

With brands facing substantial profitability challenges due to price pressures and rising costs, it’s crucial to carefully manage pricing and promotions. During events like Prime Day, which emphasize deals, the impact of discounts on the digital marketplace intensifies competition across categories.

To effectively capture attention and drive sales this Prime Day, our data has shown that running even the smallest deals can have a dramatic impact on a brand’s ability to capture sales, and ultimately ensure the visibility and conversion of their products.

Incrementality is the long-term plan brands need to invest in now

Additionally, incremental sales will become more important for brands to win online as the competition heats up and ROAS cools down across the board. Brands should be looking for ecommerce tools that measure incremental Return on Ad Spend (iROAS), to ensure their ad dollars are truly providing a return this Prime Day and long after.