Profitability Takes Center Stage as E-commerce Adapts to Challenging Conditions
In the wake of a tumultuous few years, online retailers are shifting their focus to improved profitability in 2023 amidst challenging economic conditions. Sales dampened and performances fell short in 2022, as retailers grappled with rising costs, the resurgence of in-store shopping, and consumers facing squeezed disposable incomes.
Major players in the e-commerce landscape, including Asos, Amazon, and Zalando, have all felt the impact and are now prioritizing profitability in their strategies. Zalando, for instance, experienced a challenging 2022 with a slight dip of 0.1% in annual revenues and a significant 60% drop in EBIT. In response, the retailer unveiled plans to concentrate on margin and streamline operations, aiming for a laser focus on profitable growth, according to Chief Financial Officer Sandra Dembeck.
Asos, on the other hand, managed to return to profitability in its latest quarter after reporting a £290.9 million loss in the preceding six months, despite a 14% decline in sales. The e-tailer attributed the sales decrease to deliberate actions taken to improve profitability through prudent capital allocation.
The entire e-commerce industry has faced similar obstacles, with skyrocketing inflation, escalating costs, a perpetual battle for tech talent, and consumers grappling with shrinking disposable incomes. As retailers adapt to this challenging landscape, the question arises: What does profitability look like in 2023? How are retailers approaching this goal, and what hurdles must they overcome to improve their trading figures?
In our comprehensive report, we delve into the potential contours of a new era of profitability for UK e-commerce in 2023. We also consult industry experts who provide insights on how retailers can forge ahead in the current environment.