The market growth slow-down, urgent issues with returns and yet another purchase of Lazada shares by Alibaba. The Track Me Fast team takes a quick look back at what has been shaping the e-commerce industry in summer 2022.
Like it or not, the turbulence of political and economic events in 2022 has inevitably had a huge impact on the state of the global online commerce industry. More importantly, this trend is likely to grow even more visible closer to Q4 2022, primarily fueled by record-breaking inflation rates and the continuous hurdles across the supply chain.
But before moving forward to the next season, let’s recall what major news was shaping the e-commerce market worldwide in the three summer months of 2022.
Gradual Online Commerce Growth Slow-down
Even though the e-commerce industry continued growing in 2022, the dynamics was slowing down, as reflected in most of the online retailers’ Q2 2022 business results, released in summer. More importantly, the entire U.S. market value in this segment, for example, showed only ~7% YoY growth in Q2, compared to the previously tracked 40%+ YoY increase in 2020 (per US Department of Commerce data).
However, if there’s one online shopping category, which has been on the rise this summer, it’s the beauty segment.
Namely, as the NPD Group research revealed, despite the mounting financial pressure, consumers have increased spendings on beauty products in the past months (up to an impressive amount of over 9,000,000,000 USD in the high-income sector), and the overall market resilience in this niche is likely to strengthen during the upcoming Winter Holiday season.
Mounting Issues with Returns
While in the pandemic times the free return option is what used to drive customer engagement and purchase intent to the extremes, by 2022 the issue with refunds and returns had turned into a huge challenge for most e-retailers. Namely, such issues are exceptionally noticeable in the apparel niche, where the problem of “wardrobing” has been worsening over the past several years.
Particularly, according to the 2022 data, almost 30% of online purchases (accounting for tens of tonnes of products) are currently returned, with most of these ending up disposed of in landfill.
The trick is, while the initial product delivery usually takes little time to handle, its return usually demands much greater operational and logistics efforts, not to mention the inevitable financial toll on the seller.
In view of this, many online retailers (e.g. ASOS) have already added a return fee to mitigate the financial risks, however, the overall impact of such decision on the number of returns in Q3 – Q4 2022 is yet unclear.
Stakeholders Accelerate Investment in E-Commerce across the ASEAN
One of the major news this summer was Alibaba’s announcement of their yet another purchase of Lazada shares from several of its minor shareholders. According to most experts, such a bold move has demonstrated the investors’ confidence in the growth potential of the digital shopping industry in ASEAN, where less than 5% purchases are currently made online, and the Asian e-commerce in a whole.
More importantly, as the analysts presume, the recent buy is primarily aimed at fueling more resources into Lazada in view of the growing competition on the regional market, like the rumored Amazon’s entry, or the already announced JDI’s expansion of operations in Southeast Asia.
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