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How the cost of living is affecting E-commerce 

Do you want to know what I hate? Current events. At least when you look back at historical events you can detach yourself from the chaos that has emanated from our species from the moment we gained sentience. The burning of the library of Alexandria? Never been there. The war of the Roses? I prefer […]

09th Aug 2023
How the cost of living is affecting E-commerce  09th August 2023

Do you want to know what I hate? Current events. At least when you look back at historical events you can detach yourself from the chaos that has emanated from our species from the moment we gained sentience. The burning of the library of Alexandria? Never been there. The war of the Roses? I prefer sun flowers anyway. The Roman invasion of Britannia? Probably wasn’t great for the people living through it, but God could those Romans build a good road. Current events are generally less of a spectacle, but all the more horrifying as we are actually living through them, engaging with them. Its impact can be felt in our day to day lives. And if there is one current event that is on the tip of our tongues in 2023 it’s the cost-of-living crisis. 

It’s even got its own page on BBC News, and for that reason esteemed reader, I’m not going to belittle your intelligence by explaining to you what the cost-of-living crisis is or how it happened. Mostly because Infinity Nation doesn’t pay me to rant (what a world that would be). Instead, I’m going to be exploring the effects that the cost-of-living crisis is having on E-com, and maybe even a few tips to try and help you out during this turbulent period. 

Remember what I said about not belittling your intelligence? 

I lied to you. Not because I think you are stupid, but because I think I am. So, I’m going to be approaching most of these topics in simple terms. Please don’t take it personally.

Cost of living – Impact on E-com. 

The cost-of-living crisis is affecting all parts of the supply chain. The effect most concerning to marketers is the last step of any product cycle. The customer. I’m lucky in that I don’t need to be concerned about the technicalities of shipping or acquiring materials at a higher cost, if I know what metrics that I need to work to, to ensure acquisition is profitable, my main concern is with the target audience. So, how is the cost of living affecting the consumers? 

The office of national statistics stated in June that 63% of adults in the UK are spending less on non-essentials. ( This is obviously, more than slightly disconcerting. It also stated that 30% of adults have had to dip into their savings to cope with the pressures of the cost of living. This is a 25% rise from what was stated in April 2023.  

Despite these statistics, retail sales volume saw a 0.7% increase in June. The main drivers of this appear to be summer sales and increased footfall for retail and furniture stores. My day to day is digital marketing and as such, I have noted an increase in brands planning sales promotions to help offset an anticipated seasonal downturn. 

Many brands don’t want to appear to be a discount-led. During our discovery meetings with brands more than often our clients will claim that is devalues their brand and product and eat into profit margins. However, sales are one of the things that consumers are most conscious of right now. Promotions have the capacity to be highly successful if approached correctly. To see how we helped one client to achieve growth during a time when their industry was seeing decline, please check out our case study ( 

People have less money. 

Sometimes the simplest ideas are the most important. The cost-of-living crisis has impacted most consumers. Consumers have less buying power with their money due to high inflation rates and companies are increasing their prices to mitigate rising operating costs. It then stands to reason that consumers are buying less.  

The biggest impact for digital marketing, in most cases is a decrease in conversion rate compared with last year (YoY) because of these two conflicting factors:  

  1. Luxury goods seem to be seeing the largest impact as consumers are more reluctant to spend higher amounts.  
  1. Lower conversion rates directly correlate to a higher acquisition cost.  

But what can you as a business actually do about this?  

  1. You need to do a website UX review. If you can pinpoint where your customers are dropping out of the user journey, you will quickly be able to determine whether falling conversion rates can be improved with some on page conversion rate optimisations.  
  1. Word of mouth from your advocates: Understand why your customers are or aren’t buying can help you to determine consumer barriers. If your email list is large enough, maybe consider a short questionnaire sent to your loyal customer base to learn how to best appeal to the audiences that you already have.  
  1. Review your merchandising: Do you have supportive products which you could bundle? Bundling products can show to customers a desire to save them money whilst also increasing your Average Order Value (AOV). A higher AOV can account for a higher acquisition cost, leading to the same ROAS and revenue despite a lower number of conversions. 

Is It All Doom and Gloom? 

Yes. Probably not the light-hearted answer that you were hoping for. I would love to wax lyrical about silver linings and that it’s always darkest just before the dawn (I hate that expression by the way. Its darkest at mid night. When the sun is behind the earth the most). But the reality of the situation is that there does not seem to be any easy way out of this. Businesses need to adapt to new buying behaviours and work harder than before to attract and maintain customers. And with that will come new strategies to win the customer that might be outside of the previous target acquisition range. Knowing your margins and balancing the books here, to direct your digital partner to optimise to the right KPI will be key in succeeding in ecommerce this year. And that is the reality, the bleak, bleak reality.    


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