Report: Online spending up in July, but shifts to cheaper options

In the heart of the back-to-school shopping season, consumers have shifted to online shopping, opting for cheaper goods and alternatives, according to e-commerce data from Signifyd, an e-commerce fraud protection platform. That could mean that economic stressors could be a cautionary tale for consumers.

Key findings from Marked E-commerce Pulse data for July includes:

• Online spending rose year-on-year in July, but the fastest growth came in orders under $100. Meanwhile, purchases over $500 were nearly flat year-over-year.
• Health Tips for the Upcoming Holiday Shopping Season remain elusive. Overall, online spending is growing by 10 percent per year, but growth was powered through discounts and consumers purchasing cheaper goods.
• The average order value fell 4 percent compared to July 2023, indicating caution among consumers.

Are consumers tired?
“What we saw in July was not surprising given recent macroeconomic trends,” said Signifyd CEO Raj Ramanand. “Online retail sales remain healthy, But, clearly, economic uncertainty and falling surplus savings weigh on consumers. We have entered an era where merchants need focus on profitable growth, not growth at all costs. This It’s time for brands to create lasting customer value by doubling down on the long-term relationships they build with the customers they serve.”

Signifyd suggests that retailers that focus on long-term outcomes will be able to compensate for smaller basket sizes by encouraging customers to return in the long term.

E-commerce Sales July 2024 vs July 2023

• Groceries, up 27 percent
• Fashion and apparel, up 12 percent
• Recreation and leisure, up 5 percent
• Luxury goods, up 1 percent
• Electronics, 0 percent
• Auto parts, down 1 percent
• Household goods, down 8 percent
• Beauty and cosmetics, down 9 percent
• All verticals, up 10 percent

Consumers are losing value in an uncertain economy
“The decline in average order value is a bit concerning,” said Signifyd senior data scientist Phelim Killough. “Add to that, the fact that basket size, or the number of items per order, fell 9 percent, and that’s not a very flattering report. Higher overall spend, lower average order value AND smaller stroller sizes tell consumers’ stories Who are they? “by reducing costs and finding cheaper options for the things they need.”

Killough’s analysis shows how consumers spent their money in July. Overall, Signifyd found that e-commerce orders “increased 15 percent in July compared to a year earlier.” The increase was reportedly driven by lower-priced purchases. Breaking down the average spend per order into $100 increments, Signifyd found that orders under $100 were up 17.7 percent compared to July 2023. In contrast, orders over 500 dollars increased by only 1.5 percent compared to the previous year.

Signifyd noted that “economists had warned that consumer spending, the engine of growth that has roared since the end of the pandemic, can’t turbocharge forever. Record savings, boosted by pandemic stimulus payments, are fading, and strong job growth faltered in July, briefly causing panic in stock markets.”

Signifyd, reflecting on the nature of the broader economy, found that consumers spent “solidly in some retail verticals in July, while pulling back in others.” Traditional back-to-school (BTS) and back-to-college verticals were a mixed bag. Apparel spending It was up Up 12 percent from a year earlier, while spending on electronics remained flat and spending on household goods fell 8 percent.

BTS retail spaces want and need
Discounts played a role in back-to-school shopping this year, with a focus on “wants” and “needs.” The average discount applied in the electronics category was 12 percent. Apparel shoppers enjoyed an average discount of 22 percent, about the same as 2023. Household item discounts were on average nearly 29 percent higher, or 3 percent higher, than a year ago, but even those deals weren’t enough to encourage consumers to step up their spending on household items beyond what they did last July.

The average discount for all transactions across Signifyd’s entire merchant network of “thousands of retailers” was 23.5 percent, an increase of 3 percent compared to discounts applied in July 2023.

Spending on groceries increased, while spending on cosmetics decreased
Other industries that saw significant swings in annual sales in July included grocery, recreational, outdoor and luxury. Grocery spending continued a trend that began in the spring, rising 27 percent annually. Again, the increase in spending in July was driven by volume, not price increases. Auto parts, beauty AND Cosmetics sales fell year-on-year by 1 and 9 percent, respectively.

Methodology
Signifyd E-commerce Pulse data is derived from transactions across the Commerce Network of retailers and e-commerce brands. Commerce Network intelligence also powers the Signifyd Commerce Protection Platform, which uses AI-powered machine learning models and data from billions of transactions to detect and block fraudulent activity while increasing the number of approved good orders. Signifyd has logged more than 600 million unique shopper wallets globally, meaning that 98 percent of the time a shopper visits a Signifyd-protected site, Signifyd’s machine learning models recognize the shopper immediately.

Data courtesy of Signifyd