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ANALYSIS The pound shop goes digital

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This is the week that the pound shop goes digital. By this time tomorrow, not one but two new sites will have opened their virtual doors, offering online access to flatrate £1 shopping for the first time.

Steve Smith, who originally founded Poundland (but is no longer connected to the business), is set to take his offering live at noon tomorrow. The site promises everything from tools and car products to electricals, food and stationery. Rival Poundworld also says its new site is coming soon.

But while was expected to be the UK’s first online pound shop, it’s been pipped to the post by

The site’s founders, Exeter-based Donna and Mark Baker, told the Western Morning News that the timing was coincidental. The couple trialled a pound-store offering last October, that grew out of their existing business During that trial, they told the WMN, customers spent around £19 per transaction.

“It’s a really exciting time and online shoppers have been waiting for this for quite a while,” Mrs Baker told the paper. “The phenomenon of pound shopping in the UK is now a part of many shoppers’ regular spending habits. This combined with the huge rise in online shopping made us realise there was a huge gap in the market for an online pound shop.”

The site actively sells itself as an online alternative to Poundland: “So make your money go further with our innovative online alternative to Poundland: a fast and easy way of getting the value items you want at a price you love, without even needing to leave the house,” the website promises.

Established UK discount retailers have been slow to move online: in the grocery sector neither Aldi nor Lidl has a transactional site. Along with discounter B&M, which sells both food and non-food, both offer sites for online research. However, private members sales sites have grown exponentially as consumers look for discounts in a time of austerity, while discount stores focusing on other markets, such as book retailer The Works sell online.

Up to now, there’s always been a question mark over whether low-cost retailers could trade profitably online. Certainly, it seems unlikely such sites will offer the frills that others do. Free delivery seems to be out, with currently charging £4.50 for postage, with postage free when shoppers spend £30 or more.

However, economics suggests overheads are far lower on an online shop than a real world store. We’ll be interested to see how this market develops.

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