Q1 2026 vs 2025: What Changed in Ecommerce (The Data)

[00:00:00] Steve: We've seen a good amount of. Of new, of total revenue increase that new customer revenue was up total revenue was up like 13.6%. And more of it coming from returning customers than new customers that saw better growth. But I think the real story that we've seen in the two major platforms that we, we spend a lot in Meta and Google is that.

[00:00:23] Despite increases in spend, we've, in meta, we haven't seen as much of a decrease in ROAS as we might expect. So the platform looks more elastic than it did last year.

[00:00:34] We

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[00:01:02] Richard: Hey folks. Welcome to another episode of the E-Commerce Playbook Podcast. I'm your host, Richard Gaffen, director of Digital Product Strategy here at Common Thread Collective, and I'm joined today for very special D two C index edition of this podcast. I'm joined by Steve Ook, who is our head of data Strategy here at Common Thread Collective.

[00:01:20] Is that right? Am I getting that right?

[00:01:22] Steve: Director of data,

[00:01:23] Richard: Director of Data. Director of Data. That's right. Our director of Data here at Common Thread Collective, and he joins us on occasion to share his observations from the dataset that he's pouring over on a daily basis here at Common Thread. So, what we wanna talk about today is.

[00:01:40] Obviously, well, I mean, we're near the end of April here, so Q1 has been wrapped for a while, but we thought the most interesting thing to kind of pull out from the dataset that we've been reviewing over the last little while here is the year over year changes between Q1 2026 and Q1 2025. So, we're gonna dig into that.

[00:01:57] Steve, why don't you give us a, a brief overview of kind of the things that we're seeing in the data year over year for Q1.

[00:02:03] Steve: Certainly Richard, thanks for having me on again. We've seen a good amount of. Of new, of total revenue increase that new customer revenue was up total revenue was up like 13.6%. And more of it coming from returning customers than new customers that saw better growth. But I think the real story that we've seen in the two major platforms that we, we spend a lot in Meta and Google is that.

[00:02:29] Despite increases in spend, we've, in meta, we haven't seen as much of a decrease in ROAS as we might expect. So the platform looks more elastic than it did last year. We were able to spend more without efficiency declining as much, and in Google's case, we did increase spend there and actually saw an increase in roas.

[00:02:49] So. That's not something that we would normally expect if so clearly that market as well took, had an increase in elasticity or spending power.

[00:03:00] Richard: Right. Yeah, and I think that that's kinda the main headline here. Like the one, I mean, there's a couple data points here, but the one that really stood out is that the year over year in Q1, facebook spend is up 25.28% year over year, which is, it's a huge jump. Whereas while meta roas, as you've alluded to, only degraded 3% year over year which is pretty remarkable.

[00:03:22] And then again Google ROAS saw a 12% jump. Am I reading that right?

[00:03:27] Steve: Yes, 12% jump in Google ROAS with a 3.65% increase in spend.

[00:03:33] Richard: right. So the, the spend being slightly less of a jump, but the, there's still a jump in efficiency despite the increase in spend, which is of course, unusual. So let's talk a little bit about, I mean, I think still, like the, the jump in meta spend versus ROAS is really interesting. So let's dig into that, like why you had mentioned elasticity.

[00:03:53] Tell me a little bit more about like what you think is happening here.

[00:03:56] Steve: Yeah, I think we think about AI as just necessarily something that we apply, but we have to keep in mind that these tech companies of Meta and Google are perhaps further ahead on the curve than us and making sure that your ads are shown to perhaps the best people to purchase from your company. So I think they're getting better at that.

[00:04:19] We saw an increase in CPMs, but a better convert better click-through rate that we've seen consistently. And so I think they're being shown to better consumers. And in that way, meta has become more efficient for the same amount of money we had. We see greater spending power, the ability to spend without efficiency declining as quickly.

[00:04:42] Richard: Hmm. So overall, like then your, your take on this is just that the, the platform has become better. Like if you are doing the same things in 2026, you were doing in 2025, let's say just as a hypothetical, then you are more likely to get a better result out of meta in 2026 than you would've last year at the same time.

[00:05:02] Steve: Yes. Now this also could potentially be that we as an agency have gotten better at advertising

[00:05:08] Richard: I'd like to think so. Yeah.

[00:05:09] Steve: I'd like to think that's part of the equation too, and that we're, we're delivering better ads and you know, figuring out how to utilize meta better as a platform, including that is like incrementality and applying that correctly.

[00:05:22] So pushing into meta when we see. Greater incre than our benchmark of 120% and maybe perhaps pulling back on the accounts that see a lower incre.

[00:05:33] Richard: Right. Interesting. And actually that, that's maybe a good segue, not necessarily a segue, but I think it would be good to step back and talk a little bit about like the data set that the D two C index pulls from. So just for those of you who don't know, the D two C index is something we publish both on a weekly and monthly basis which is a newsletter that Steve writes, which kind of breaks down.

[00:05:51] The year over year changes over the past week. And then we also have a monthly report that comes out as well. Also covering consumer confidence. What we'll talk about a little bit later, but tell us a little bit about the D two C Index's data set. 'cause I don't think we've actually talked about that, but we should bring it in here.

[00:06:06] Steve: We should, because that's the data we're referring to when we talk about performance year over year. And this is the stores that are in established that have consistent performance and reporting over time that, that we have consistent revenue from the brand for at least two years and consistent ad spend in at least meta and Google.

[00:06:24] Because some brands are constrained themselves and not necessarily spend in one of the platforms or the other. So I, I wanna see consistent data from them in order to include those in our dataset. So we have I believe close to 300 stores in that data set that we're considering. And then we can break it out by vertical as well in our D two C index data that we provide.

[00:06:43] Richard: so it's a, it's not a, it is not 30,000 brands, but it is a fairly rich look into 300 brands because stylists goes so in depth and we have years of data there. So, but of course, like the one, just the caveat then being, as you mentioned before, like the, that data set is unusually able to be affected by our.

[00:07:02] Performance here at Commentary Collective, kind of the way that we're approaching things. Obviously we've taken a new tack over the last few months as everybody who's listening to the podcast knows. So we may be seeing some results of that. We're just getting better at overall, at, at winning on Facebook now.

[00:07:17] I think obviously that doesn't explain the whole picture, like clearly that there's something to do with this elasticity piece as well. That's worth considering. But, then then of course, like the other thing here is that is the imbalance, I guess. I mean, not really, but like returning customer revenue is stronger growth year over year than new customer revenue.

[00:07:35] Anything in that trend that's worth digging up.

[00:07:38] Steve: Well, I kind of expect this as brands mature. So they're, they're capturing more of their total available market of new customers, but then you have a larger existing customer file to go off of. So I would expect returning customer hope. Hopefully your returning customer revenue can increase over the years as long as you have a product that is not a massive one-time purchase.

[00:08:02] I don't expect multiple customers to return purchase on saunas or. Or wallets in the ridge example.

[00:08:10] Richard: Right.

[00:08:11] Steve: but with anything in fashion and apparel or consumables like cosmetics and beauty category or supplements or help in the health and wellness space or food and beverage, we have the opportunity to grow that existing customer file.

[00:08:29] And then I expect that returning revenue to kind of be better than new customer revenue in the long run.

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[00:09:00] Richard: Right. So this could just be a, an effect again, of our dataset maturing. Not necessarily pointing to an overall trend.

[00:09:10] Steve: Yes. I think it, it's probably a factor that probably most brands hopefully experience in that they, as they grow their existing customer file, their returning customer revenue starts to make up a greater percentage of their revenue.

[00:09:23] Richard: All right. Okay. So, then I think one thing I wanna jump to is. If there's sort of two headlines I guess, that have come out of looking at the year over year performance here in Q1. One of course was the increase in spend versus the sort of minimal drop in MER or rather roas. But then the other thing is sort of thinking about the way that consumer confidence.

[00:09:45] Has shifted. So we also have something part of the D two C index called the DCCI, which is the Direct to Consumer Confidence Index. For those of you who do or don't know, the Consumer Confidence Index is, I mean actually Steve, you're probably better equipped to tell us a little bit about what the Consumer Confidence Index is and how the D two CCI kind of varies from it.

[00:10:04] Steve: Yeah, so that is a partnership that we have with no Commerce that provides a post-purchase consumer survey of five particular questions about what they think about the economy, either what they think about the economy what they think about their current purchases. Future purchases? Do they enjoy spending or saving?

[00:10:21] And do you typically purchase on a.com the brand's website or a marketplace like Amazon? And those questions give us insight to what consumers are thinking about how they think the economy will be in the future, but more importantly, how they think their, their purchasing habits will be in the future.

[00:10:40] Richard: Gotcha. So let's talk then about a couple. So there's two obviously there's five questions, but like the two kind of things that we report on the most are future purchase sentiment, which is like you're saying this is how likely do you think you're going to be to make X purchases or whatever in the future?

[00:10:55] And then two being like, how do you feel about the economy right now? So two different ways to kind of think about. How people are approaching purchasing. And so let's talk a little bit about the way those two metrics have changed year over year. So for instance, for future purchase sentiment, what does that look like?

[00:11:13] Steve: Yeah. So those each of those influence each other, but not necessarily in the way that you think. I think a lot of brands get into the habit of thinking, oh, everyone's excited about the economy, they're gonna spend more. We saw actually the opposite of that last year. Last January we saw, expectation of the future economy hitting an all time high in January, 2025. At the same time we saw future purchase sentiment hit an all time low. So people were thinking, oh, the economy's gonna be great. I'm gonna wait until it's great to spend my money.

[00:11:47] Richard: Interesting.

[00:11:48] Steve: And, and part of that might be a hangover from black Friday, cyber Monday and the holiday season of 2024 being so great.

[00:11:55] I think that was a really good time for a lot of the brands that we had. So we, we probably saw somewhat of a hangover from people in in that time, as well as hope that in the future we're gonna see a better economy. I'm gonna have more money available, I'm gonna be able to spend more of that.

[00:12:12] Richard: Right. So, and, and actually I should just make sure to clarify because I think I misspoke earlier, like both, both metrics are, how do you feel vis-a-vis the future one is. How I feel about what I'm going to do with my money. And then two is my overall sentiment about the economy. So just make that clear.

[00:12:28] Okay. So talk then about obviously of last year there was, let's say a lot of anticipation, well still like some sense like they, they weren't actually going to spend. Then what does that look like year over year? How has that shifted in 2026?

[00:12:44] Steve: So future purchase sentiment consistently this year has been better than last year. We even saw that spike up. I think consumers were really hopeful at the beginning of March. And we've seen the conflict in the Middle East take its toll on oil prices and stocks, and that has percolated down to future purchase sentiment and consumers kind of dropped off a little bit toward the end of March.

[00:13:05] We've since seen that recover a little bit. I think the promise of that conflict potentially ending. Oil prices returning to normal levels and con and consumer prices not necessarily lifting As much has led to the last couple weeks, we've seen an increase in that future sentiment and as well as the hope for the economy.

[00:13:25] So those have kind of moved in tandem the last few weeks.

[00:13:28] Richard: Gotcha. Okay. So one thing that I think would be useful to talk about here is, what I'm curious about is the way these two metrics map onto any other sort of trend, like whether that's in revenue or efficiency or something like that. So we have this huge data set of. Of basically, yeah. We've built our own consumer confidence index across tons and tons of purchases.

[00:13:51] We have like a very clear sense of what people think they're going to do, how does that map to what people actually do and how they actually behave and like, how should we intake this information and then take action on it.

[00:14:02] Steve: Right. So, all those metrics of the five questions, so those two probably weigh a little bit more. Also the, the other one of spender versus saver. Do you enjoy spending your money? Versus do you enjoy saving your money? When that kind of trends a little bit more toward the spending side, that's, that's a significant metric to keep an eye on.

[00:14:20] So the five metrics combined with our CTC dataset from the 200 and or or 300. So stores that we have we combine to calculate the D-T-C-C-I and it normally projects. Pretty well about the spending power. How much can you spend without a MER decreasing as swiftly. So it's kind of an elasticity measure for the entire new customer acquisition process.

[00:14:45] And for April we saw it around, similar to what we had last year. I don't think April was this rough. In 2025 as say January and February, January and February were certainly struggles. And we saw that kind of in that consumer confidence index.

[00:14:59] Richard: Yeah. Okay, Phil, I think that that kind of covers our bases here. Let's, let's quickly talk about where Steve, where can people find the DDC index and the D-D-C-C-I?

[00:15:09] Steve: So we have a few different sources on Common Thread Collective itself. We have our D two C index where we update it mo weekly with the data points from you know, up to the last two years of data. So you can kind of see how brands are doing year over year for. On a daily basis or a weekly basis we do write a newsletter on the D two C index.

[00:15:30] That's a partnership with no commerce that we're writing a monthly newsletter that as Richard mentioned, and then dt cci.co is where I publish the composite consumer confidence index about what I think the elasticity is going to be for the next month. And combined all these different factors that we've talked about.

[00:15:49] Richard: Yeah. So if you wanna get sort of more of that type of insight check those out now. Obviously, like we got some we gotta work on the naming conventions over here on our side of the coin. But go and comp through co.com. Check out D two C index and also D two dt cci.co if you're interested in some of our consumer confidence data as well.

[00:16:08] But all right, I think that's gonna do it for us. Thank you, Steve, for joining us. Thank you once again for an enlightening update on what's going on in the world of e-commerce data. And yeah, that's gonna do it for us. We'll see you all next time. Take care.

[00:16:20] Steve: Great. Thanks for having me on.