Sales at UK’s leading online only retailers reach record £11bn, up 13% in a year

Sales at the UK’s Top 20 online only retailers reached a record high of £11bn in the last year, up 13% from £9.7bn the previous year*, shows research by RPC, the City-headquartered law firm.

This growth is largely driven by the success of fashion retailers, which increased their revenues by 22% to reach £6.5bn in the last year.

ASOS reported full-year sales (to 31 August 2020), up 39% on the prior year. Sales at Farfetch experienced the biggest growth, with revenues currently increasing by 90% (as at quarter end 31 March 2020).

RPC says that the coronavirus pandemic has accelerated the shift towards online retail as high street bricks and mortar retail (other than supermarkets) had been left largely out of the game for months.

RPC says that the amount of hard data that online fashion retail can gather from social media interactions, through to website browsing and sales means they have even more opportunity to respond to consumer trends in a more speedy and focussed way than bricks and mortar only retail (even when they are open for business at all).

Jeremy Drew, Co-head of Retail at RPC says: “Whilst you can’t beat the theatre and social element of high street shopping online retailers have the edge in personalising the experience and convenience.”

“Ever slicker algorithms allow online retailers to make tailored suggestions or allow the shopper to more rapidly navigate huge stock ranges. Same day delivery and a better choice of sizes and colours from online retailers are giving them a competitive edge over bricks and mortar.”

Online retailers have been exploring the use of technology to make the shopping experience as seamless and enjoyable as possible.

A growing number of retailers have signed up to work with buy-now, pay-later platforms such as Klarna, to lower the barrier to making sales. 200 new retailers signed up to the platform each day in H1 2020.

ASOS announced it was launching a campaign through TikTok, encouraging users to post a 15 second video showcasing three outfits. Users will be encouraged to interact with ASOS content through the app, which will be promoted via their personal feeds alongside user generated content. The retailer has also partnered up with TikTok influencers to help it reach the Gen Z demographic.

RPC says that social distancing requirements could accelerate wider adoption of technology such as drones and robots to deliver online orders to customers. These have been employed by restaurants to deliver meals but could also be used to deliver same day retail orders.

Jeremy Drew explains: “Real time analysis of data from websites has also allowed e-retail to take fast fashion to a new level with the advantage of little or no competition from bricks and mortar during the “lockdown”. That data can be used to add and cut lines on a daily basis, shift where emerging trends are displayed via websites and inform the launch of limited-edition ranges.”

Retailers needed speed and flexibility during the lockdown for example to shift their focus to selling more leisurewear lines as customers browsed for more comfortable clothes for working at home, at the same time reducing more formal office wear lines.

Hybrid retailers have also invested in improving their online offering to improve the customer experience and making the purchasing process easier. This has involved offering better customer service and free delivery and returns. Brands are also benefitting from new technologies that enable customers to virtually ‘try on’ products including clothes, make-up and hair colours.

Some retailers have reported an uplift in sales during lockdown despite the broader economic challenges posed by coronavirus:

• Online grocery retailer Ocado announced plans to raise £1bn in investments, as online supermarkets almost doubled their share of the total grocery market from 7% pre-lockdown, to 13%
• Fast fashion retailer Boohoo announced it expects its revenue for the current year to grow 25%, with shares reaching a record high value during lockdown. The company recently acquired high-street brands, Warehouse and Oasis, which entered into administration as a result of the pandemic

Jeremy Drew, Co-head of Retail at RPC says: “There is no doubt that many areas of online retail have experienced growth since the pandemic began. E-retailers will be looking to capitalise on what is likely to be a long-term shift in how people spend their money.”

“E-retailers are looking at ways that they can make online shopping as seamless as possible for customers. At the same time, working tirelessly to boost capacity in the supply chain to meet and sustain increased demand through their e-commerce platforms.” 

 “Online retailers have been investing in experiential technology, such as augmented and virtual reality as well as live streaming of fashion events and product drops, to help replicate the experience of shopping, but from the comfort of home. With ever more people likely to gravitate to shopping online in the future, brands will struggle to remain competitive if they do not continue innovating effectively.”

“With data one of the biggest battle grounds, high street stores, without loyalty cards, are finding it far harder to analyse and then predict the customers presence, making personalised advertising and promotions harder to execute.”

Sales of the Top 20 online only UK retailers have increased by 62% since 2016

*Companies House