Online retail did not have it easy in 2023. From ongoing supply chain issues resulting from the Russia-Ukraine conflict to sky-high inflation that increased operational costs and triggered the greatest cost-of-living crisis in three decades, retailers faced yet another year of challenges. 

Take Farfetch, for example. Macroeconomic conditions significantly impacted its revenue and profit over the last year. Acquired in December 2023 by global ecommerce retailer Coupang, it took an injection of $500m (£394.8m) in emergency funding to save the embattled brand, as the luxury retailers’ market value plummeted from $24bn in 2021 to $220m by the end of 2023. 

And with the IMRG Online Retail index forecasting 0% year-on-year growth for ecommerce as a channel in 2024, following a sharp sales dip in January, it’s never been more imperative for retailers to get their strategies right to capture consumer spend. 

But despite the tough trading landscape, many retailers are winning in the ecommerce space, remaining resilient thanks to rapid adaptation and innovation within the sector. 

The world’s largest retailer, Amazon, had a record-breaking Christmas with sales of $170bn (£1.33.3bn) in the three months to December 31, 2023, up 14% year on year. 

January 2024 saw the largest monthly sales rise for retail since April 2021, as retail value sales grew 3.9%, according to the latest Office for National Statistics (ONS) retail sales data. Online spending values fell by 4.1% over the month to January but grew by 1% over the year. 

Heading deeper into 2024, can retailers remain cautiously optimistic?  

Broadly speaking, the answer is yes. Consumer confidence is on the up - in January 2024, it rose to its “best headline score in two years”, according to the GfK Consumer Confidence Index. The score is calculated by five measures, with the consumers' ‘view on their personal financial situation for the next 12 months’ question broadly considered the best single indicator as to how the nation’s households feel. This measure increased by two points in January to zero and held in February, ending 24 consecutive months of negative scores. 

Inflation is expected to gradually ease its grip despite the Bank of England holding out on its 2% UK annual rate target. Sitting at 4% in January 2024, down from 11% in the autumn of 2022, it’s certainly moving in the right direction.

As a result, Retail Navigator analysts anticipate retail could see an uptick in the second half of 2024, as inflation gradually brings prices down, which should filter back into increased consumer spending. 

However, with new EU food import border checks having begun in January, disruption continuing in the Red Sea and political change on the horizon with a UK general election later this year – all likely to further impact prices – there are still significant challenges for retailers to overcome in the year ahead. 

While some online players will struggle, what is clear is that those set to triumph online are the ones keeping in touch with their customers’ needs, wants and values, transforming and evolving, leveraging data, prioritising UX, and investing in tech to increase efficiencies and capture consumer spend. 

With the help of our analysts, we have compiled here The UK’s Top 30 Ecommerce Retailers report, comprising two exclusive rankings that celebrate the notable retailers succeeding and turning the tide online. 

The first is the predictive Top 30 Retailers by Forecasted UK Online Sales in 2023/24; the second is the Ones to Watch: Top 30 Retailers by UK Online Sales Growth YoY% in 2022/23, based on past performance year-on-year growth. 

The UK’s Top 30 Ecommerce Retailers report delves into the winning strategies of retailers from both lists, pulling out vital learnings to provide a toolkit that you can learn from and be inspired by in 2024.  

So, let’s meet the ecommerce power players of tomorrow. 

After an unrelenting battle against the soaring cost of living, inflation is easing somewhat, if slowly, and consumer confidence is on the up. Yet the trading landscape remains tough.

Sentiment is divided for the year ahead: while 24% of consumers expect to have more money to spend in 2024, 31% of shoppers are predicting they will have less to spend, research conducted by Retail Week in October 2023 found.

It's more important than ever that retailers put customer needs at the very core of their proposition. To win, retailers must develop an intelligent blend of personalisation, supply chain and flexible payment solutions alongside seamless, integrated customer experiences.

In this chapter, we highlight the core pillars of customer-centicity to prioritise in 2024.

Personalisation:
No longer a ‘nice to have’

Personalisation is the transformation all retailers want to get right – 76% of consumers say they’re more likely to purchase from brands that provide personalised experiences, with 78% being more likely to recommend them to others, according to consultancy firm McKinsey's research, published in November 2021.

Similarly, 71% of customers expect brands and businesses to deliver personalised interactions, and 76% become “frustrated” when this expectation is not met.

This is why, with retailers now able to collect more detailed data than ever before and the explosion of AI tools unlocking productivity wins, retailers must leverage customer data to personalise touchpoints throughout the customer journey across multiple devices and channels. Think powerful recommendation engines and completely individualised homepages.

For example, eBay, which features 14th on our forecast FY2023 UK online sales ranking, and 29th for FY2022/23 year-on-year growth, uses AI and structured data to deliver highly personalised offers designed to incentivise social media-style ‘snacking’ behaviour among customers. The marketplace has also invested in generating more relevant search results and personalising the mobile experience.

Meanwhile, Ocado, forecast sixth in our FY2023 UK online sales ranking, up one place from last year, has integrated personalisation into shopper journeys using AI. Customers see favourite items and previously purchased items first in searches, and reminders are sent out for their most-purchased items.

Fashion retailer Asos, 11th on the forecasted FY2023/24 online sales ranking and 13th for ones to watch FY2022/23 growth, has also innovated in the personalisation space in recent years. It has put a personalised twist on its ‘new in’ recommendations and has partnered with ecommerce tech platform Rokt since August 2023, to serve customers better personalised post-purchase offers. The partnership draws upon Rokt’s “machine learning and artificial intelligence optimisation” to offer more personalised ads in a bid to drive the engagement of its shoppers and boost brand loyalty.

Customers at the heart of the supply chain

Retailers are now deploying myriad fulfilment options, ranging from Screwfix’s 60-second click and collect to Amazon’s Prime Air drone delivery – make no mistake, failure to deliver swift, convenient and cheap fulfilment can turn off even the most loyal customers.

But what delivery options do consumers actually want? Retail Week research conducted in October 2023 found that price is a sticking point, with 69% of respondents preferring free delivery, even if it takes longer. Thirty per cent said they want the flexibility of being able to choose from different delivery options, and 24% put the ability to choose a specific time and date among their top three delivery preferences.

Amazon was named by consumers as offering the best shopping experience of all the retailers – it is no coincidence that the brand that conquered fulfilment also crowns the list of our top 30 retailers by sales.

The online marketplace boasts a vast range of convenient delivery options, including free standard, scheduled, one-day four-hour, same-day and overnight. Not content to sit on its laurels, its much-hyped 60-minute drone deliveries are set to launch in the UK and Italy in late 2024.

Elsewhere, Ikea UK, 20th in our top retailers by forecast sales ranking and 30th for 2022/23 growth, invested €3bn (£2.6bn) in 2023 in doubling up its out-of-town big-box stores as distribution centres. The aim? Faster and cheaper deliveries for customers and lower carbon emissions. In April 2023, the homewares brand announced it would invest £4.5m in last-mile electric vehicles across the UK in a bid to hit its goal of 100% zero-emission deliveries by 2025.

Lululemon – placed in sixth position in our ones to watch growth ranking for FY2022 with a five-year forecast CAGR of 13.9% – is achieving customer-centricity within the supply chain by boosting transparency, which is upping efficiencies, and enhancing the customer experience for those ordering through the website.

The athletic apparel retailer utilises RFID technology in its stores to support staff efficiency and keep track of inventory levels, as well fulfilment options such as buy online and pick up in-store. This tech enables store staff to leverage “real-time, accurate data” when serving customers. The brand also employs product lifecycle management software to ensure the journey every product takes, from ideation stage to development, is tracked in one centralised location.

Tesco is the UK’s biggest grocer with an established supply chain strategy and it has come in a steady third in our forecast sales ranking. It employs advanced analytics systems to help predict what customers are buying, coupled with modelling tools that simulate the performance of distribution depots. In ‘final mile’ terms, Tesco’s rapid-online delivery service Whoosh, created in partnership with Uber, can deliver in as little as 30 minutes and is now available from half of Tesco’s Express chain – representing 55% of UK households.

Flexible payment solutions:
What’s worth the investment?

As retailers work to ease the pressure of the cost of living on shoppers with price cuts, loyalty schemes and value-led own-brand ranges, flexible payment solutions provide another avenue to win attention from money-conscious consumers online.

Frasers Group, which is up one place on last year to 13th in the forecast total sales ranking and fifth for FY2022 YoY% growth, has taken flexible payments into its own hands. In April 2023, the retailer unveiled Frasers Plus, a membership scheme and flexible payments solution rolled into one that unifies all customer data in one place. Shoppers receive bespoke access to offers, points and payment plans of up to 36 months across all the group’s brands.

Similarly, The Very Group, which is ninth on our top 30 for forecast UK online sales 2023/24 up one from last year, offers a range of flexible payment options, including buying outright, splitting purchases into three payments and Buy Now Pay Later (BNPL) through its self-serve Very Pay platform.

Very takes an even more mindful approach to payments, offering advice through its website. Customers can log concerns on a range of topics from mental health to finance difficulties and access tips on how to save money. In 2023, Very launched a pilot to provide unsecured personal loans to help families with their finances. Existing Very Pay customers could apply online and receive a quick decision. They could then self-serve through their Very Pay account, accessing flexible options to repay a regular instalment, make a full payment or repay any amount in between.

Such initiatives are well in line with the retailer's core strategy of supporting families to “get more out of life”, targeting the retailer's three main pillars of ease, choice and understanding.

Brand partnerships are also big in this space. Retailers such as Asos, H&M and River Island have partnered with BNPL firm Klarna, leveraging its AI-powered in-app shopping lens to compare prices and retailers, and read reviews of more than 10 million items. THG partnered with FLA-regulated Newpay in March 2023, to allow shoppers the ability to split purchases into flexible monthly payments across multiple retailers.

“In the face of rising inflation, BNPL can be a useful payment option for shoppers to better manage their cash flow. However, when offering flexible payment options such as BNPL, it will become increasingly important to stay on the right side of regulators while providing a fair and transparent product for consumers,” says Moshe Winegarten, chief revenue officer at payments service provider Ecommpay.

“According to research conducted by Ecommpay, 33% of British consumers would remove items at checkout if BNPL wasn’t offered. Additionally, 73% of businesses that offer a flexible payment option say they have experienced more of their customers using it as inflation has increased,” he says, emphasising the value of flexible payment options for shoppers and retailers alike.

Seamless, integrated user experiences

Smooth user experiences are a must for any retailer in 2024, since even the slightest friction can lead to abandoned baskets.

Marks & Spencer has placed digital-led customer experience firmly in the spotlight as it develops an astute omnichannel offering with heavy personalisation.

Innovations smoothing the path to purchase include an AI-powered ‘style finder’ visual search feature, which allows customers to upload a photo of an outfit and find similar products available at M&S. On the M&S Sparks app, customers will find an uber-personalised digital shopfront, while the ‘scan & shop’ facility allows customers to cut queues in-store.

Marks & Spencer’s Chester-based customer contact centre deals with five million queries per year via live chat, email, social media, phone and post. Its CX platform streamlines the capture of customer feedback and analysis, empowering leaders to make more customer-driven strategic decisions.

Chief executive Stuart Machin has commented that while the retailer is “pretty confident that in the medium term, in the longer term, online sales still have the opportunity to grow faster than stores” there is “more to do to drive online growth and improve returns on data, digital and technology investment.”

Areas the retailer is set to invest in over the coming year include the modernisation of legacy technology systems, driving conversion through improving its in-app shopping experience, and providing more personalised experiences by leveraging customers’ data.

In 2024, the message is clear: whether pureplay or omnichannel, digital is irrevocably intertwined with almost every part of the shopping experience.

The store of the future operates a unified commerce environment that empowers customers to shop where, when, and how they want to, combining all the potential touchpoints to better personalise the customer experience.

As bricks-and-mortar brands innovate to leverage digital efficiencies in store, pureplay retailers are increasingly branching out into pop-up stores to introduce a physical element into their customer journey.

Pureplays investing in pop-ups

Pop-up shops serve an important role in reaching new customers, but their success hinges on whether the retailer manages to retain those customers after the temporary store is shuttered.

eBay, LookFantastic and Depop all opened digital-focused pop-ups during Christmas 2023, while pureplay fashion giant Asos made its first solo foray into physical retail on Black Friday weekend. Its Oxford Street pop-up was “shoppable both physically and digitally” and the retailer partnered with Snapchat on a feature that allowed customers to generate a digital avatar of themselves wearing a range of Asos apparel they could purchase in store or online.

Meanwhile, pureplay jewellery retailer Abbott Lyon opened the doors to its pop-up store in Westfield White City in November, with personalisation and interactivity at the heart of its first concept store. In-store tablets were available to help shoppers design custom pieces, while a pick ’n’ mix style wall added yet another interactive element.

Mobile apps enhancing the store experience

Sitting in 11th place for UK ones to watch online sales growth in FY22/23, Lush has been a true innovator in the app space, employing tech to create an enhanced in-store experience for customers while also staying true to its eco credentials.

The brand has increasingly disposed of packaging over the past few years, instead selling products ‘naked’. To overcome the obstacle of missing product information, it added a clever feature called ‘lush lens’ to its app, which was relaunched in 2021 alongside its new website. Customers can snap a photo of any ‘naked’ item in-store and be taken to the relevant product information online. In 2023, the retailer shared its aims to bring the lush lens “to peak form and usage” as it focuses on bringing its digital operations to “top of class” through investment in omnichannel across stores and ecommerce.

Boots, John Lewis, and Ikea have also deployed a product scanner feature on their apps, with the latter two also providing a customer-facing stock checker.

QR codes: Connecting physical and virtual

 After a faltering start, QR codes are now recognised by retailers as one of the simplest ways to link physical stores with the virtual world.

Boots, for example, has deployed more in-store QR codes that make it easier for shoppers to quickly order items online if they prefer home delivery.

Marks & Spencer deployed QR codes for the launch of its beauty packaging take-back scheme in June. Customers who recycled their packaging were able to scan a QR code on the in-store recycling box to receive 10% off Beauty at M&S products to buy online or in-store.

In September, fashion brand Nobody’s Child launched digital product passports in the form of QR codes. Customers can now scan clothing labels to check the garment’s eco credentials and download a unique NFT as a receipt.

Unified commerce is the ultimate aim

The natural step after omnichannel, unified commerce means putting all data and platforming in one place to leverage it across the whole of the business. It brings all sales channels together to deliver streamlined data for retailers and a truly seamless customer journey no matter how shoppers want to access the brand.

Asda is on the path to building a unified commerce environment with a full technology re-platform – “the largest scale project of its type in Europe”. By the end of 2024, it aims to have fully replaced its core systems, browsing experience, app, routing, order management, picking, single sign-on, contact centre systems and mobile check-in proposition.

Simon Gregg, senior vice-president for ecommerce at Asda, said: “[It] has allowed us to deep dive on our customer opportunities and build upon our mission to unify our ecommerce portfolio, providing a long-term omnichannel proposition for the business.”

Fashion retailer AllSaints is another brand striving for a more unified ecommerce approach. Chief innovation officer James Reid has explained that his team “is working hard to unify the multiple ways through which we provide an unrivalled service to our customers across retail, ecommerce and wholesale.”

One of its strategy innovations that has been a “huge success” has been the adoption of a ‘single pool of stock’ that is available to all, regardless of the channel the customer chooses to shop with.

Partner viewpoints

Moshe Winegarten, chief revenue officer, Ecommpay

2023 was another challenging year for retailers, with consumer spending continuing to be influenced by rising interest rates and stubborn inflation. Although the economic situation remains fragile, I believe that with a greater emphasis on ecommerce, there are still fantastic opportunities for businesses to thrive.

As retailers maximise their online presence to beat economic stagnation, Ecommpay has seen increased demand for alternative global and local payment methods, along with solutions such as payment links, which allow end consumers to pay from anywhere, on any device.

Ecommpay survey results show that open banking and buy now, pay later are where business leaders see the biggest growth opportunities. That’s no surprise, as our data also shows that three-quarters of consumers would abandon an online checkout if their preferred payment method were unavailable, making optionality essential.

As each customer becomes more valuable, conversion rates can significantly impact revenue and long-term success. Therefore, businesses must ensure their payment flows are streamlined, secure and aligned with customer expectations.

Despite a tricky economic backdrop, I remain optimistic about the future of retail and congratulate all the companies featured in this report. As businesses seek to reduce costs, grow efficiency and increase revenue, Ecommpay will always be there to help.

Philip Hall, managing director EMEA, Rithum

It was a challenging year for brands and retailers’ profitability with ongoing inflationary pressures, geopolitical uncertainty and changing consumer demands and expectations. Despite these factors, there are opportunities for profitable growth.

One way brands and retailers can reach new audiences and revenue streams is to take a multichannel approach. Today’s online shopper is comparison shopping – a resounding 82% now visit multiple websites throughout their buying journey, according to our 2023 Online Consumer Behaviour Global Report.

Retailers and brands need to meet consumers where they are by exploring different ecommerce models such as dropship and private or public marketplaces, collectively referred to as unowned inventory. Different models can help retailers and brands meet specific objectives, whether that's extending product assortment without taking on inventory risk, expanding internationally, reaching new audiences, or finding more cost-efficient delivery methods.

Marks & Spencer is a great example of innovation in retail. M&S adopted different selling models to support its growth strategy. It did this by expanding its product assortment with third-party brands and reaching new audiences through its unowned inventory approach. By embracing this as part of its omnichannel business, M&S is ensuring it meets shifting customer demand while providing a consistent customer experience

The lines are blurring between brands and retailers. Today’s global consumers are as comfortable shopping on marketplaces as they are on retailers and direct-to-consumer brand websites. What is clear from the leaders in this report, is that whatever approach or model you choose keeping the customer front and center and having the flexibility to adopt different variants of unowned inventory is the key to success.

Eric Jorgensen, VP EMEA enterprise, Zendesk

As the Top 30 Ecommerce Retailers report reveals, 2023 was not an easy year for retail due to macroeconomic circumstances, the cost-of-living crisis and worldwide conflicts.

Consumers are more careful when spending their money and retailers have to invest in a powerful CX strategy to keep customers happy and loyal. As Zendesk’s CX Trends 2024 Report shows, more than half of customers would switch to a competitor just after one bad experience. In the retail industry specifically, 63% of CX retail leaders are rethinking their entire customer journey due to emerging tech like generative AI.

The integration of AI powered chatbots which help service agents focus on complex issues and improve customer experiences with personalised fast responses can be the differentiating factor. However, as AI continues to develop, clarity and transparency on its usage will be essential to build trust with customers.

It is a pleasure to see that lots of retailers already deliver a sophisticated CX based on individual customer needs. We congratulate all the retailers named in the top 30 for tirelessly working on delivering the best experience for their customers even during challenging times.