After a bumper 2020, online retailers are facing the largest drop in sales volumes on record. What's going on and what can merchants do?

Whilst there's finally some good news for the high street, The UK's Office for National Statistics reported a month-to-month decline in online sales for April and May (-5.6% and -5.7% respectively). Most of our online merchants fall into the non-food category, which has seen a decline in sales by nearly 10% - compared to the same period a year earlier, when sales skyrocketed by over 60%.

According to the IMRG Capgemini Online Retail Index this is the largest decline in sales volumes on record, noting that the health and beauty category have seen a significant drop of 29.2 percent. 

For many merchants, sales volumes continue to be higher than the same period in 2019, but that may be of little solace to those who have taken on larger operating expenses during the pandemic. 

Dramatic drop in traffic for June

Traffic has been hit hard! Some merchants have seen a staggering decline in weekly visits, suffering as much as a 50% drop since March.

Has the COVID bubble burst?

For some online retailers COVID has been a blessing. We've seen some merchant growth rates as high as 900% between 2019 and 2021. So what's going? Why have sales dropped?

Reduced lockdown restrictions and the opening of hospitality venues combined with better weather is great news for the high street, but at the expense of online retail. We expect online performance to continue to be sluggish in the summer months compared to 2020, but still higher than the same period in 2019.

Many consumers are now rediscovering the high street, with clothing stores seeing as much as 69% well-needed growth in April. However, some consumers continue to remain at home despite the relaxation of lockdown restrictions. Consequently, online sales still haven't dropped to 2019 levels, but may continue to have negative growth for the summer months. 

The pandemic also saw the highest growth rate of new e-commerce stores. Consequently, the competition for online sales is fiercer than ever.

What can merchants do?

With less overall traffic merchants will be focusing heavily on conversion rates. This will be as important for paid advertising as much as it is for organic search. Here are some of the key areas you could be looking into:

• Barriers to sale
  Make sure your site is easy to navigate, easy to read and has minimal visual clutter to hinder the user experience. If your website has pop-ups, ask yourself if they're really benefitting you. Too many floating dialogues are an immediate turn-off for some users.
• Delivery costs
  High delivery charges are the number one cause of cart abandonment. It may be time to evaluate your delivery charges. We recommend targeting costs to your biggest demographic and fastest selling product ranges.
• Promotions
  Discount events or coupons are a great way to incentivise both potential and existing customers. You can increase average order value with a discount reward on a minimum spend (for example, get 10% off on orders over £80). Reward existing customers with a discount for repeat orders - the cost of sales acquisition for repeat sales is far less than new ones. 
  
• Speed of service
  Consumers live in a world of 24-hour instant gratification. Although recent events have made it much harder for merchants to sell on speed of service, it's time to evaluate your supply chain. If you can't, focus on sales customer care. Get those orders in and you'll be surprised how well your customers respond to excellent customer care and communication. 
  
• Clear returns policy
  Some consumers will actively seek out a returns policy and may hesitate to order if you're not transparent. Make sure your returns policy is easy to find.
• Marketing, marketing, marketing
  With increased competition across nearly all categories, marketing is your number one priority to increase traffic. Understand your demographic, find your niche and market your heart out. 

These are just a few ideas you may wish to look at on top of your existing SEO and PPC strategies.