Is Ecommerce Finally Rebounding? Here’s What the Data Says.

[00:00:00] Richard Gaffin: Hey folks. Welcome to the E-Commerce Playbook Podcast. I'm your host, Richard Gaffin, director of Digital Product Strategy here at Common Thread Collective, and I'm joined today by a very special guest, our, uh, Chief Data Scientist here at Common Thread Collective. Mr. Steve Rekuc is joining us today to talk a little bit about what we're seeing, kind of across a lot of our different sort of data aggregation tools and, uh, just getting a sense of what, where things are trending before or as we move into holiday rather.

[00:00:25] Richard Gaffin: So Steve, uh, welcome to the program. What's going on, man?

[00:00:28] Steve: Yeah. Thanks for having me back,

[00:00:29] Richard Gaffin: Oh yeah, of course.

[00:00:31] Steve: yeah, just taking a look at the normal, uh, macroeconomic data for both e-commerce and then consumer sentiment about e-commerce and purchasing for the upcoming holidays. I think that's something that's really, uh, probably top of mind for everyone at this point.

[00:00:44] Richard Gaffin: Yeah, definitely. So just to be clear then, like a, the couple tools that we're gonna be looking at today are our D two C index, which is again, an aggregation of all the data within our program status. That gives a sense of kind of overall what the health of the e-commerce industry is across a number of different [00:01:00] metrics.

[00:01:00] Richard Gaffin: And then our, another tool, we call it the D to CCI, direct to Consumer Confidence Index, which sort of assesses overall consumer confidence across a few different questions. Uh, we use the sort of like a survey tool that, that is, I believe, post-purchase on a bunch of different e-comm sites. And so the idea there is to get a sort of a sense of the health, not only like the health of the e-com brands across these different metrics, but also how consumers are feeling.

[00:01:24] Richard Gaffin: We know there's a lot of macroeconomic. Craziness going on right now. So this helps us kind of get to the bottom of that. So let's start off with a couple of, uh, interesting headlines here. One is that total revenue is up 10% year over year, since I believe October 21st. Is that correct?

[00:01:39] Steve: That's correct. Yeah. 10% since October 21st, 6% if we're taking a look, uh, four, we. Week, look back year over

[00:01:45] Richard Gaffin: Okay.

[00:01:46] Steve: but it's more strongly in the last, yeah,

[00:01:48] Richard Gaffin: Yeah.

[00:01:49] Steve: uh, five days or so.

[00:01:51] Richard Gaffin: Yeah. And then, uh, similarly across, uh. That same time, or is rather, is it the 28 day frame [00:02:00] timeframe, returning customer revenue is up 11% and then since October 13th it's up 13.74%. Um, so definitely seeing some, some strong returns there. So what let's kind of like dive into a little bit, like why, why do we think that this is trending this way?

[00:02:16] Richard Gaffin: Um, and what are some conclusions that we can draw from this, at least initial strong signs.

[00:02:21] Steve: Yeah, I, I think brands might be leaning into their returning customers a little more at this time

[00:02:25] Richard Gaffin: Mm-hmm.

[00:02:26] Steve: to generate more new customer revenue, revenue during October. It's a little bit slower period of time, so it's a little bit easier to lean into your existing customers. To try and drive a little bit more revenue growth if, uh, if that's what you're looking for.

[00:02:40] Richard Gaffin: Mm-hmm.

[00:02:41] Steve: that like brands as they grow over time are, have a much larger existing customer file, they have more opportunity to potentially grow in that manner, just by the fact that they've existed Walker,

[00:02:54] Richard Gaffin: Yeah, so you're saying like part of it is just like the brands maybe in our database have matured [00:03:00] since last time we measured this or since the, the same time in 2024. And that maybe just kind of all that this is indicating, or is there some sort of like macroeconomic reason that we're seeing total revenue trending upwards, uh, in 2025 as compared to, uh, 24?

[00:03:17] Steve: There, there might be some economic trepidation that is causing

[00:03:20] Richard Gaffin: Mm-hmm.

[00:03:21] Steve: when consumers feel a little bit more, uh, concerned about the economy, the tendency is to go with what you know to

[00:03:27] Richard Gaffin: Hmm.

[00:03:27] Steve: that you are familiar with. Um, just like it is to, you know, potentially vacation to a similar, to the same spot as always, or do the same sort of, um, thing that you have normally done. Um, safety, basically,

[00:03:41] Richard Gaffin: Yeah.

[00:03:43] Steve: psychological safety.

[00:03:44] Richard Gaffin: Yeah. Okay. So let's, um, move then. I think because like the more of the interesting discussion, I think is to be had within those questions of consumer sentiment. So you'd mentioned of course, uh, this sort of sense, maybe a general sense of trepidation that didn't exist, [00:04:00] of course, for obvious reasons at the same time last year, where does the D-C-C-C-I show us headed in terms of just like overall consumer sentiment about the economy, about.

[00:04:10] Richard Gaffin: Future spending, that type of thing.

[00:04:13] Steve: So for October, we haven't closed the month yet, so I didn't calculate the D-T-C-C-I for November and project it out, but we did see some individual metrics within. October that looked kind of a little on the rougher side, but one that, that is certainly promising. Uh, one of which the economy, the sentiment about the economy is still kind of down from the beginning of the year. Uh, there was a lot of, uh, I think a lot of hope, um, around the end of last year and the beginning of this year about the economy potentially turning around, um, a number of reasons. Um, and that kind of, uh, have kind of softened to that idea.

[00:04:52] Richard Gaffin: Mm-hmm.

[00:04:53] Steve: seen that trend now below where sentiment was last year, at the same time about economic sentiment. Um, so [00:05:00] there's some more trepidation about the economy. It's still, uh, higher than we saw in 23. at this time, significantly higher than 23. so we're, we're in a better place, uh, in terms of that. Uh, what we did see that was extremely, uh. Positive was, we've seen future purchase sentiment, rise higher than it was in the last two years, uh, for the month of October.

[00:05:28] Richard Gaffin: Mm-hmm.

[00:05:28] Steve: is, do you plan on spending more or less money in the next three months? Had, uh, the highest value that we've seen, uh, in the last three years in October,

[00:05:39] Richard Gaffin: That's interesting. So basically what, what we're seeing if we look at these charts, and I think what we'll have to, uh, we'll have producer Corey take these and kind of put 'em on screen for our viewing audience, but just to explain for those at home, um, the percentage of people who plan to spend more in the future rather than less has been trending well beneath 2023 and 2024 for the last, let's say [00:06:00] the first 10 months of the year, but moving into October.

[00:06:04] Richard Gaffin: What we're seeing is that sort of the, the percentage of people who plan to spend more in the future, obviously holidays are coming up, is actually overtaken where it was in both 2024 and 2023, which is interesting because what that um, uh, because the chart or the number of people who believe that the economy is going to be worse in the future.

[00:06:25] Richard Gaffin: Is actually, um, or maybe I should put it this way because it's maybe easier to interpret to the tar this way. The percentage of people who think the economy is going to be better is lower in 2025, uh, than it was in 2024. And that's actually going in the other direction. So at this time, in 2024, people were starting to get hopeful.

[00:06:44] Richard Gaffin: At this time here in 2025, people are definitely starting to be less hopeful. But the percentage of people who are planning to purchase more in the future is reversed. 2025 is higher than 2024. So I'm sure there's a number of psychological explanations we could dig into for that, but do you have any initial sense of like what [00:07:00] this trend may mean?

[00:07:01] Steve: Hmm. Yeah. Uh, so I think, um, clearly this bottomed out, uh, this future purchase sentiment bottomed out in January. So in other words, consumers and, and. amazing is at that same time, people had a record high level. They thinking the economy would be better in the future.

[00:07:19] Richard Gaffin: Yeah.

[00:07:19] Steve: a lot of people were thinking, well, the economy will be better in the future.

[00:07:22] Steve: I'll wait for the economy to be better before I make my purchases. now that they're, now we're a little bit further along and they're like, well, uh, that hopeful about the economy, maybe it'll be better in the future. It's certainly not a, a really strong negative sentiment about the economy.

[00:07:39] Steve: It's more, um. uh, stuck in like a neutral phase, uh, and with a slight negative, uh, about the economy. But now that they've held off so long now that they future purchase sentiment has sat so low for quite some time, I think that there's a probably a built up desire to spend money. [00:08:00] now that's just psychological

[00:08:05] Richard Gaffin: Mm-hmm.

[00:08:05] Steve: in a way and looking for reasons there. But, uh, at least that's what we're seeing in the data.

[00:08:10] Richard Gaffin: Yeah, yeah. The potential that people may be paradoxically wanting to purchase more because, um, give, it gives them psychologically a sense of, I dunno, like something exciting or interesting going on, whatever the case may be. But I think like overall, the, the, the trend is towards. Like this is not Black Friday's gonna be basically how Black Friday always is.

[00:08:33] Richard Gaffin: We're not ringing any alarm bells right now. Um, however, I think there is still sort of the overall question of like, well, okay, so we've talked about these broad sort of data points, these broad trends, and we can speculate about what's going on macroeconomically, what's going on with consumer sentiment.

[00:08:49] Richard Gaffin: But it sort of begs the question of how does, how do these trends, the things that we're reporting on in the D two C index and the D two CI. Relate [00:09:00] to how you actually sort of model out the future. And so one thing that I think we wanna just talk about today a little bit that's kind of exciting is this idea of correlating the consumer sentiment, some of the, the metrics from our consumer confidence index with the way that we forecast your potential spending power in the future.

[00:09:19] Richard Gaffin: So I wanted to jump into that real quick and um, we have a couple interesting charts that we want to kind of dive into here. Again, we'll just. Have Corey put those up on screen. Um, but these are for a couple of brands that we have. And, uh, before we jump into exactly what these charts mean, why don't you define for us, Steve, what does spending power mean?

[00:09:43] Steve: Yes. And this kind of is a term that came about, uh, from our modeling. So, um, we needed to kind of put away that growth strategist and brands can think about, how much they can spend in a month to kind of like [00:10:00] conceptualize what's going on with the model. an easy way to think about it was to look at. much can I spend before my CAC increases $1?

[00:10:10] Richard Gaffin: Hmm.

[00:10:10] Steve: that became our kind of interpretation of spending power basically. Um, and we came up with that term to kind of capsulate how much more you could spend in one of your peak months relative to one of your much slower months of the year. Um, it, it's kind of a great way to be able to think about like, great, I know I can spend more Black Friday and Cyber Monday, but. In November so I can spend more in November. much more,

[00:10:39] Richard Gaffin: Mm-hmm.

[00:10:39] Steve: and how, how seasonal am I too?

[00:10:43] Richard Gaffin: Yeah.

[00:10:43] Steve: and we see brands with drastic differences in spending power throughout the year and drastic differences between each other or between year over year. And

[00:10:50] Richard Gaffin: Mm-hmm.

[00:10:50] Steve: love to see that metric grow for a brand, to see them be able to spend more and still not lose their efficiency.

[00:10:58] Richard Gaffin: Right. Um, [00:11:00] okay, so let's talk then a little bit about these specific charts, like maybe even talking about the decision behind incorporating D two CCI consumer confidence data into. Our spending power modeling.

[00:11:14] Steve: Yeah, this was something I talked about on the Marketing Operators podcast way back in June.

[00:11:18] Richard Gaffin: Yeah.

[00:11:19] Steve: they had me on to talk about the DT CCI and, and kind of looking at it in terms of spending power. And one of the things I said I wanted to do at that time. And it's been in my head for a while, was incorporating these metrics to kind of think about how each brand performs. because we think about, uh, you know, Taylor has talked about brands being a market taker, not a market maker. Um, we're not, the brands that we work with are. Necessarily large enough to force things to happen in the market. So if consumers are really feeling one way or another, we want to know what aspect of the market are we able to take?

[00:11:58] Steve: How are we able to set our [00:12:00] sales and capture that consumer sentiment, that consumer win? What are, what sentiment of the consumer is your brand most affected by? And that's gonna be different for different brands. I think we've always kind of conjecture that it might be different, and that's why I wanted to dive into what metrics are affecting your ability to spend money without your CAC going up. that's why I want to come up with these correlations.

[00:12:24] Richard Gaffin: Yeah. Okay. So let's talk about this first chart that we're looking at here. So this is for one of our brands. Um, and for those who are watching, and you can actually see this, uh, the blue line represents this is the economy as a whole, and then the orange line represents our brand. And what we're looking for here is a correlation, obviously between a consumer spending, uh, or rather between consumer confidence in uh, uh.

[00:12:50] Richard Gaffin: Metrics, sorry. And what are the performance of our brand? So talk to us a little bit about, so what, what does the, the numbers on the [00:13:00] side, the, the sort of, what is that? The X axis, the Y axis? What's the, what's the vertical one? The Y axis? Yeah. Yeah, yeah.

[00:13:08] Steve: So on this one I was looking for. So what I actually wound up doing is looking against a number of different metrics from

[00:13:15] Richard Gaffin: Mm-hmm.

[00:13:16] Steve: um, and seeing if they correlate to any brand's performance and in this particular case, um, so we've, in order to make the metric kind of look appropriate, um, relative to the D-T-C-C-I metric, to make the spending power look relative, uh. I normalize the data, meaning you're taking the data and kind of putting it on like a much scale. Um, because spending power is not, um, typically on a scale we're talking about spending power in terms of thousands of dollars or

[00:13:47] Richard Gaffin: Mm-hmm.

[00:13:47] Steve: or hundreds of thousands that you can spend before CAT goes up $1.

[00:13:51] Steve: So we've normalized that so it looks, um, in a more compressed fashion. And then we also nor, uh, normalize the economic sentiment for this [00:14:00] particular brand.

[00:14:00] Richard Gaffin: Mm-hmm.

[00:14:01] Steve: or not for this particular brand from the D-T-C-C-I, just to compare relative to their spending power. we actually see a really, a pretty good correlation of 0.79

[00:14:12] Richard Gaffin: Mm.

[00:14:12] Steve: consumer economic sentiment, how I feel the economy will be in the future, and the spending power of this brand. So when consumers were feeling better about how the economy would be in the future, brand was doing better.

[00:14:30] Richard Gaffin: So, and, and to your point about, um, this being different for different brands, like it's potentially true depending on the vertical, that when consumers feel worse about the economy, you might, there might actually be a correlation to your brand doing better. So you have to kind of take it on a case by case basis.

[00:14:45] Richard Gaffin: But in this particular case, it's like as consumer sentiment goes up, so do the fortunes of this particular company.

[00:14:51] Steve: Yep. And, uh, and a lot of con brands would feel that way as well.

[00:14:55] Richard Gaffin: Yeah.

[00:14:56] Steve: yeah, well, the economy is doing better. Are people thinking better about the economy? Of course, [00:15:00] they're, they're

[00:15:00] Richard Gaffin: Mm-hmm.

[00:15:00] Steve: to, to spend money on my brand.

[00:15:02] Richard Gaffin: Yeah.

[00:15:03] Steve: that's almost an intuitive, like easy leap,

[00:15:06] Richard Gaffin: Right.

[00:15:07] Steve: uh, yeah.

[00:15:08] Richard Gaffin: That makes sense. Okay, so then let's, uh, let's kind of jump into this next chart here, uh, which we'll also put up on the screen, but this is so a similar correlation between now here. This is the overall spending power sort of fluctuations of the entire D two CI, so all of the brands in the index compared to.

[00:15:27] Richard Gaffin: This specific brand. And if you're able to see the chart, you'll notice that the, the orange line, which represents the brand and the blue line, which represents the entire index as a whole, are very, very close together. So that the, the kind of overall consumer confidence, um, or, or rather sort of the changes in spending power and the change of, of the, the whole and the changes in spending power of the brand are pretty closely aligned.

[00:15:48] Richard Gaffin: So talk, talk to us a little bit more about what we're seeing here.

[00:15:52] Steve: Yeah, and this would make the most sense overall and

[00:15:55] Richard Gaffin: Mm-hmm.

[00:15:55] Steve: it's not. Just necessarily the economy in, in a sense, this brand is [00:16:00] a great sample of what is going on with overall,

[00:16:04] Richard Gaffin: Mm-hmm.

[00:16:05] Steve: the D two C index data in terms of the spending power. So, uh, our, the spending power that we see. For the overall sentiment, winds up being very close to what this brand is also experiencing in terms of spending power.

[00:16:20] Richard Gaffin: Right.

[00:16:20] Steve: So the D two C, the D-T-C-C-I calculations for the future would then probably be even more applicable to this brand,

[00:16:29] Richard Gaffin: Right.

[00:16:30] Steve: that they might wanna watch really closely.

[00:16:32] Richard Gaffin: Yeah. Okay. So for as you, we sort of talk about like how you incorporate this into each brands. So o obviously like what we do when a client onboards with us here at Common Collective is we build out what we call spend an A MER forecast, or what we've now sort of rebranded as our spending power forecast.

[00:16:49] Richard Gaffin: And essentially what that does is, as Steve mentioned, it gives you a sense of how much you were able to spend before. You begin to lose money on that sort of nextran of spend, right? And um, so as we build [00:17:00] that for you and kind of construct a forecast and a model through over the next 12, 24 months, whatever it happens to be.

[00:17:07] Richard Gaffin: There's a lot of different things that we incorporate into it, seasonality, uh, your historical data, all that sort of thing. But this is kind of the next thing that we're bringing into this. So, Steve, it sounds like basically when a client comes on board or when we kind of execute for this, this, for them, what you're looking at is sort of a, a unique, um, or, or maybe it's kind of like looking at the correlation potential correlations in our data with the brand's unique data.

[00:17:32] Richard Gaffin: Finding those and then incorporating that into the model. Is that kinda how it works, or is there anything else like that would be interesting to pull out from that?

[00:17:39] Steve: Well, yeah, it, it winds up becoming difficult to incorporate into a model, especially since we're projecting 15 months out.

[00:17:45] Richard Gaffin: Mm-hmm.

[00:17:45] Steve: So at this point in time, we're projecting to the end of 2026 when we're building

[00:17:49] Richard Gaffin: Right.

[00:17:50] Steve: And I don't know how

[00:17:51] Richard Gaffin: Yeah.

[00:17:52] Steve: is going to

[00:17:52] Richard Gaffin: Who knows? Yeah.

[00:17:53] Steve: Yeah. In 14 months from now. I have no idea. I, I don't even know necessarily how it's going to look two or three months from now.[00:18:00]

[00:18:00] Richard Gaffin: Yeah.

[00:18:00] Steve: so we're, this is going to potentially be a good adjustment for brands and something for them to keep an eye on.

[00:18:07] Richard Gaffin: Mm-hmm.

[00:18:07] Steve: we, we've done this forecast hoping that sentiment kind of. on the pattern that it has

[00:18:14] Richard Gaffin: Mm-hmm.

[00:18:15] Steve: that's the assumption behind the model, but there could be some adjustments then noticing coming into November that, oh, um, economic sentiment is down.

[00:18:24] Steve: So that first brand we talked about might have to, um, adjust down their forecast for

[00:18:31] Richard Gaffin: Right.

[00:18:32] Steve: Or dt CCI goes up a little bit in November, higher than last year.

[00:18:37] Richard Gaffin: Mm-hmm.

[00:18:37] Steve: have the potential to spend even more than we did. So it allows for nuances in the in as we get into, getting closer to the month

[00:18:47] Richard Gaffin: Right.

[00:18:48] Steve: potentially adjusting those spit those daily forecasts that we do as part of growth strategy for a brand.

[00:18:53] Richard Gaffin: Right. Yeah. So, you know, obviously we talk about this a lot, but no forecast is ever perfect. Um, there are just [00:19:00] some models that are better, better than others. So despite the fact that obviously we think our model is pretty great in terms of its ability to forecast out 12, 14 months, whatever the case may be, obviously as you approach the date.

[00:19:10] Richard Gaffin: That you're actually forecasting for the month that you're forecasting for the, the kind of overall, uh, environment is going to change. And that's an inevitability. So what this helps do is give you more tools to, on the fly, sort of think through what is most likely to happen as you approach get closer and closer to that upcoming month.

[00:19:28] Richard Gaffin: Um, so a super powerful tool. Uh, I was gonna say, Steve, anything else that you wanna kind of pull out here? Any, any other interesting data points that you think we should discuss?

[00:19:38] Steve: Um, I think there's. These are really interesting charts for us to have,

[00:19:43] Richard Gaffin: Mm-hmm.

[00:19:44] Steve: then that gives us the ability to kind of make those adjustments. Um,

[00:19:47] Richard Gaffin: Yeah.

[00:19:47] Steve: strategist and the individual brands. Um, I think on the D-T-C-C-I front, um, that future sentiment kind of going up was really encouraging to see.

[00:19:59] Richard Gaffin: [00:20:00] Mm-hmm.

[00:20:00] Steve: that's one of the most notable things. And of course we've seen kind of a, a pull away. From Amazon, uh, this year as well in consumer sentiment. And those are interesting for those

[00:20:11] Richard Gaffin: Yeah.

[00:20:11] Steve: that are already see this correlation because

[00:20:13] Richard Gaffin: Mm-hmm.

[00:20:14] Steve: I've correlated this for a number of brands already,

[00:20:17] Richard Gaffin: Yeah.

[00:20:17] Steve: that might be listening.

[00:20:19] Richard Gaffin: Yeah. Well, so I mean, and that's great to hear. I know like when we do the D two C index newsletter together, oftentimes the kind of outlook is a little bit grim. Discounting is going up, revenue is combing down. There's efficiency particularly is going down, I should say, rather than revenue.

[00:20:33] Richard Gaffin: But what we're seeing is like, there's at least a couple things that are good indicators, uh, for the few months to come. So, um, alright. I think, uh, I think we can wrap it up there. Uh, cover some good ground. I, I wanna say real quick though, for those of you listening out there, if you're interested in modeling out your forecast for 2026 with this level of specificity for your specific brand, uh, across your historicals seasonality, and then of course incorporating these types of things like how your brand correlates with consumer [00:21:00] sentiment, we are happy to do that for you.

[00:21:02] Richard Gaffin: Hit us up commentary code.com. You know where to find us. Hit the hire us button. We would love to chat more. So, um, yeah, I think we'll wrap it up there. Steve, appreciate you joining us and for everybody else out there, take care and we'll talk to you next time.

[00:21:15] Steve: Thanks for having me.