Pulse Ecommerce Survey #1: A Commentary

The Respondents

The split of respondents was 64% fashion and then a 36% mix of food and drink, homewares, health and beauty, or other. The responders all hold senior roles, with 70% in core senior eCommerce roles and then the rest i​​n more general management, tech or marketing positions.

We benchmark the overall performance of clients monthly and we’ve seen that fashion brands are currently performing better than the other verticals we measure - with the fashion brands typically averaging 20-35% YoY growth and then non-fashion being closer to flat (main two other categories we have enough data on are ‘home & garden’ and ‘food & drink’).

Optimism

Overall, the brands averaged a 7.4 out of 10 for optimism, looking ahead at trade this year, and then 7.3 out of 10 when rating how successful trade was in 2022.

These are obviously very close (almost too close…), but it’s positive to see this so high, given all of the negativity in the media, particularly in Q3 last year. The most common answer for both was 7, with a few 9s and 10s (mostly premium fashion brands).

Priorities

The top priorities for the brands we surveyed for this year were:

1. New customer acquisition (a clear leader, which is good to see given the scrutiny around this area over the last 6-12 months) (70%)

2. Optimising conversion rate and other on-site metrics (40%)

3. Entering new markets (we’ll cover this more later) (21%)

4. Improving overall profitability / efficiency (19%)

5. Increasing CLTV and other retention metrics (19%)

For fashion brands, this was mostly:

• Acquiring more customers

• Increasing conversion rate (CR%) and other on-site metrics

• Increasing customer lifetime value (CLTV)

Investment

I then asked a similar question, but focused on where the responders are planning on investing the most budget for 2023, with the top 5 being:

1. New customer acquisition (58%)

2. Paid search and social (27%)

3. CRM (22%)

4. Data & Insights (21%)

5. Technology (19%)

This was multiple choice, so there’s likely a bit of cross-over between the answers. Again, new customer acquisition was the biggest focus by quite a long way - which, again, is good to see given the contrasting views you see online.

Overall, there’s nothing really surprising here - I see the technology one referring more to new third party additions (e.g. personalisation or CRO tooling) to a tech stack and the odd replatforming project (which I mostly see with a goal of reducing OPEX spend these days).

The data and insights one is also good - I do see people talking about investing more in BI or other measurement focused tooling and also potentially hiring more people in this area, but it’s slowed down a bit with the market’s volatility.

The next question was focused on where the respondents are looking to invest less budget in or reduce expenditure, which is always interesting. The top five were:

1. TV advertising (39%)

2. Out of home advertising (33%)

3. Tech stack (31%)

4. Paid search and social (22%)

5. SEO (15%)

We’ve probably seen a similar trend overall, with many reducing spend on ATL or brand marketing activity that’s harder to measure (widely predicted) and the paid and organic search piece being an obvious one to review for many (although this was much lower than the top 3 answers). This being said, we’ve seen budgets moved from the ATL (Above the Line) area into brand / top of funnel activity via Meta and Google.

I would say many of the brands we work with and speak with are still investing in technology and relevant services, but are maybe looking to reduce spend (or rather, wastage) on unnecessary or over-priced third parties (very common and an easy area to address) and then also replatform away from overpriced tech stacks to the more agile SaaS platforms (with Shopify obviously leading the way at the moment).

One of the biggest trends I’ve seen, as alluded to here, is people moving away from the likes of Salesforce Commerce Cloud, Adobe or SAP and moving towards Shopify and BigCommerce. I’ve also seen a shift away from some of the more composable stacks towards the SaaS platforms in places.

Growth Markets

The next question was focused on target growth markets and where attention is being focused - the top 5 here are:

1. USA and Canada (not surprising, big trend currently) (81%)

2. Europe (67%)

3. Middle East (16%)

4. Asia (non-China) (13%)

5. Australia (10%)

This is interesting, but again not too surprising. Our average client is very focused on scaling or growing in the US market at the moment (obviously having one eye on their fairly promising economic performance) and then we’re seeing a lot of focus on the Middle East and Asian markets such as Japan and Korea as well. China is commonly a big focus, but we have less exposure to it with many using a third party partner or having a licensed partner running that activity.

Team & People

The next question is focused on hiring and team building and 66% of respondents said they’re looking to hire for a new role in their team this year. I’d say this is promising as many of our clients have reduced focus on expanding the team and increasing in-house capabilities and have maybe more focused on working with partners.

We do have some clients still investing in people though and the biggest net new areas we’ve seen people look at include Product and Data. I’d say we’ve seen a reverse of the trend around in-housing performance channels and also development, which has been up and down for the last couple of years.

Key Takeaways and Recommendations

It’s really positive how much optimism is across our respondents. This is also supported by positive results we are already seeing across the agency; Q1 YoY revenue is up 19% globally.

Naturally we are seeing a massive increase vs pre-Covid but we are driving 6x more revenue YoY across all clients globally which is very positive.

Customer acquisition is a key focus and with considerable noise around increasing customer acquisition costs, it’s positive to see that competitiveness certainly seems to have declined in Q1 23. We are seeing minimal YoY increases in CPMs across Facebook and CPCs across Google which is positive; a large number of publications are suggesting PE firms are reducing the DTC budgets being applied to performance marketing and as our survey also suggested, efficiency and profitability is a key focus for brands.

We’d expect to see competitiveness remain quite flat YoY following the trends from 22. However, we’ve never not seen BFCM drive less YoY growth than the average annual increase in ad costs and therefore we expect this trend to continue with the minimal YoY increase in costs, increasing closer to 20% over peak.

We expect to see a number of brands looking to grow profitably and a great option here is internationalisation, especially where access costs and the ability to localise sites and currencies is so much easier now. Many brands are focusing on the US and we are seeing much stronger YoY growth within the US, up 55% for our clients Vs 17.5% in the UK, which is mirrored in US consumer confidence.

You can see the full results of the Pulse Ecommerce Survey #1, and if you want to discuss the results of this survey in more detail, then do get in touch.