The e-commerce Covid hangover continues. During the second quarter, industry growth decelerated broadly. Below, a look at key themes and macro trends from Q2 2022 e-commerce results.
Medium Term Optimistic
The Covid hangover continues. E-commerce mushroomed in 2020 and 2021, as lockdowns shut stores and people sheltered at home. Today, consumers have more options for where to spend their money: online or offline, goods or services. Travel is booming (recent security lines at JFK are some of the worst I’ve ever seen) and restaurants are full. Reopening is driving a shift in consumption from goods to services and from online to offline. Additionally, while competition for spending is increasing, persistent inflation is eating away at discretionary spending power. For e-commerce companies, that’s a double whammy.
Industry growth reflects this challenging operating environment, which eBay’s CFO described as the most challenging in recent memory. During the second quarter, e-commerce growth decelerated broadly. (In addition to the dynamics above, a strong US dollar pressured headline growth rates for US businesses with significant international exposure.) A number of companies — including eBay, Etsy, and Wayfair as well as Amazon’s first-party online sales — declined outright. Similar to the first quarter, marketplaces selling apparel like Poshmark, The RealReal, and ThredUp posted the best growth, while at-home categories like furniture struggled.
Like Tolstoy’s unhappy families, all e-commerce companies are unhappy in their own way. Etsy attributed 75% of its year-over-year GMV decline to higher consumer mobility and the remainder to deteriorating macro, inflation, and the war in Ukraine. GMV growth at The RealReal was restrained by product shortages, as higher-than-anticipated sales attrition negatively impacted supply acquisition, as well as changing product mix. Farfetch’s growth was depressed by Covid lockdowns in China, its second largest market, exiting Russia, historically its third largest market, and double-digit declines for marked-down items as part of a strategy to focus on full-price items (full-priced items double-digit growth rates).