INDUSTRY REPORT

The state of ecommerce: Q2 2025

Q2 2025 defied expectations. Despite economic and tariff challenges, data reveals surprising resilience and shifting priorities across ecommerce platforms. The anticipated outcomes of rising prices and falling conversion rates haven't materialized as predicted. Instead, we're seeing a more nuanced landscape where operational execution and cost management have become primary success drivers.

The cost of doing business continues to rise. Advertising is becoming more expensive, retailer margins are improving, and consumers are actively trading down to lower price bands—putting direct pressure on brand profitability. In response, successful brands win where it matters most: on the digital shelf. Sales consistently grow faster than glance views, proving that focusing on conversion optimization pays off and drives real growth.

Operational metrics show stability too. With out-of-stock rates growing slower than sales, retailers are planning better and raising the bar for brands. The message is clear: success now depends less on driving traffic and more on mastering conversion, managing rising costs, and achieving operational excellence.

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Key takeaways

  • Inventory stabilized after Q1 surge: On-hand inventory plateaued in Q2, up 26% YoY in June and 26.8% YoY for the quarter
  • Consumer price sensitivity remained high: Average selling prices declined 2.6% YoY as customers actively hunt for deals and trade down in price bands
  • Traffic growth slowed significantly: Aggregate Q2 traffic grew just 2.2% year over year but sales growth outpaced it due to strong conversion
  • Ad spend outpaced sales growth: Ad spend grew 10.3% YoY compared to 6.5% growth in ordered product sales, indicating ROAS challenges
  • Revenue losses due to out-of-stock issues increased: Revenue loss from OOS rose 3.8% YoY, highlighting ongoing supply chain difficulties
  • Retailer margins improved despite lower prices: Despite price pressures, gross margins improved due to enhanced retailer efficiency