Although mass layoffs have so far been concentrated in the technology sector, this trend has reached retail. Zalando will lay off 5% of its global workforce (850 workers), made up of 17,000 people; Ebay will cut 4% (500 employees) and Shopify will cut 10% of its workforce (1,000 employees). Even a giant like Amazon has proceeded with the dismissal of 18,000 people and has paralyzed the construction of new logistics centers until 2024. The companies agree on the causes: soaring inflation has reduced the confidence and purchasing power of consumers. The boom experienced during the pandemic has come to an end, when e-commerce took advantage of the confinements to record its best figures.
“Growing at the same rate as during the pandemic months is not a realistic goal because the scenario was completely exceptional”, points out the president of the UNO logistics employer, Francisco Aranda. In 2021, e-commerce reached 57.7 billion euros in Spain, 11.7% more than the previous year, according to data from the National Markets and Competition Commission (CNMC). A year earlier, growth compared to 2019 had been 5.8% and reached 51.6 billion euros. There are still no definitive data on the growth of e-commerce in 2022 in Spain, but at a regional level the lower number of sales is already noticeable.
According to the latest report by Interactive Media in Retail Group (IMRG), in Europe e-commerce fell by 2.2% in January, and the association Ecommerce Europe warns of a normalization and stabilization of sales compared to the previous year, which was exceptional. It should be noted that 24% of the total purchases recorded in 2021 in Spain were made via the Internet, a figure that exceeds the European average (16.8%) and also the North American average (14.6%).
“From the second half of 2022 we detected that the growth curve of e-commerce began to slow down”, adds the president of the logistics employers’ association. This moment corresponds to the rise in inflation, the interest rate hikes by the central banks and the scenario of economic uncertainty, factors that have a direct impact on the disposable income of families and, therefore, on online shopping The fashion sector is already noticing the change: according to the sector’s employer, Acotex, online sales have fallen from the 20% recorded in 2020 to 12% in the winter sales.
The slowdown in e-commerce began to be felt at the beginning of the last quarter of 2022. “Last Christmas we saw that people anticipated their Christmas shopping to the Black Friday offers,” explains the commercial director and of marketing of the logistics company Sending, Andrés Fernández.
Back to normal
Of all the sectors, the impact will be greater on those goods that are not essential, such as technology products, fashion, sports equipment or construction materials, all of which are products with a high demand during the pandemic and which have already seen sales drop. “If we leave aside the case of food, during the pandemic it was possible to buy online all those products that made sense to buy in order to be able to withstand the fact of spending a lot of time at home in an obligatory way”, explains the B2C director from DHL Parcel Iberia, Daniel Pastrana.
An example is Zalando. The marketplace has been accumulating losses since the beginning of 2022 and in the third quarter alone the red numbers reached 35.4 million euros. For its part, Amazon closed the year with losses of 2.722 billion dollars against the record profits recorded the previous year (33.364 billion dollars).
Within e-commerce, the collapse of ultra-fast deliveries stands out. Glovo has posted gross losses of €304 million in 2022, causing its owner Delivery Hero to also lose another €623 million. GoPuff decided to leave the Spanish market in the middle of last year due to declining sales and Gorillas was eventually bought by Getir, its competitor. “With the return to normality, it is logical that the volume will drop and that not all the companies that were created or established in our country during this period will be able to maintain their business models”, states Aranda. And the way to consolidate volumes is through absorptions. “The sector is readjusting to the new post-pandemic reality, which is very different from what happened during covid”, he adds.
Part of this adaptation contemplates whether it is really necessary for a delivery to occur in 15 or 20 minutes. “It’s a much smaller market than it seemed,” says Pastrana, since the customer may be willing to pay an extra price for this type of service only in certain circumstances, such as fast food or specific needs at a specific time. If not, “buyers’ sensitivity to shipping costs is high and the vast majority of consumers are willing to wait for delivery if they can save on this concept”, he adds.
Complicated months
Due to the slowdown in the global economy, businesses and also e-commerce businesses are trying to get ahead. It is still early to calculate the impact, although the logistics employers expect complicated months: “It seems clear that it will not be a year of growth and that the real recovery may begin to arrive in 2024”, as long as the increases in interest rates and inflation. “It is difficult to know how long this situation will last if we take into account that it depends on exogenous factors”, Pastrana points out. Companies such as Inditex, Assos or El Corte Inglés are already adopting measures to face the economic uncertainty, such as charging for online returns or establishing a minimum price for orders.
What is clear is that, once this setback is overcome, e-commerce will continue its rise. “Many of the consumers who started buying online during the pandemic have adopted this habit continuously, so now the share of online purchases is much greater and the trend is that it will continue to increase progressively”, points out Fernández. The way, according to GLS, will be to combine the online store with the physical one, since it “provides a more emotional and memorable experience for the consumer”.