QUARTERLY INDUSTRY REPORT
The state of ecommerce: Q4 2024
Q4 2024 was something of a rollercoaster ride for ecommerce, marked by inventory growth, shifting consumer behaviors and an increasing need for brands to dial in their retail media advertising strategies.
Amazon's on-hand inventory rose 21.4% YoY, though Furniture and Electronics lagged. Meanwhile, seasonal events like Prime Day and Turkey 5 drove traffic spikes—but December's last-minute shopping led to OOS revenue losses. Ad spend fell YoY, with steady CPCs and mixed ROAS complicating competitiveness. And despite stronger sales, margin pressures grew as prices rebounded and discounts cooled.
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Key takeaways
- Inventory growth: Amazon's aggregate on-hand inventory increased by 21.4% YoY, driven by strategic stock buildup in categories like Grocery and Pet Products.
- Traffic patterns: Seasonal events like Prime Day and Turkey 5 drove significant traffic growth YoY across most categories, even beating out typical Q4 shopping peaks in some categories.
- Sales & margins: Q4 sales grew YoY, but margins continued to erode across most categories. Amazon's gross margin pressures signal potential cost-cutting efforts heading into 2025.
- Advertising performance: Ad spend overall declined compared to Q4 2023. CPC remained steady, while ROAS improved in a few categories, notably Toys.
- Consumer behavior shifts: Procrastination shopping in December led to revenue losses due to OOS issues, reflecting a need for improved inventory allocation strategies during peak periods.
