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AO World buys pure play mobile phone seller

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Electrical retailer AO World is acquiring an online-only mobile phone seller to capitalise on shifts in the market.

The £32.5 million acquisition of Mobile Phones Direct (MPD) will give AO a dedicated site for selling mobile phones with associated contracts to complement its existing portfolio of electrical products.

MPD, which has a base of 1.25 million customers and receives around 13.6 million visitors across its two sites in 2017, will also provide the electronics retailer with a proprietary technology platform built for selling phones with an associated contract.

The company has contractual relationships with the four UK mobile network operators as well as distributors of handsets.

AO said that the two companies have complementary online business models oriented around customer service. The majority of MPD’s revenue comes from mobile network operators for delivering new customers and upgrades, usually based on it receiving a share of customer revenues.

With the buy, AO aims to capitalise on a general shift to selling mobile phones online. According to AO, online sales represented approximately 35% of new smartphone contract sales in the UK in Q1 2018 compared to 26% in Q1 2015.

The shift has not been lost on other online retailers, with Amazon beginning to sell contract phones in 2014, although it has since stopped offering deals on its site. AO has its own limited selection of mobile phones available.

AO World netted revenues of £796.8 million in 2017. It operates in the UK, a Top250 retailer in InternetRetailing’s IREU Top500, as well as and in Europe. Last year saw AO launch a transactional mobile app across all its territories as part of work to make its customer journey easier.

Steve Caunce, CEO of AO World, said: “This deal represents a significant step forward in our strategy of developing our growing range of online electricals and adding new complementary categories that customers want and expect from AO.

“Mobile Phones Direct already has a leading position within the UK online mobile phone market and is a business which is highly complementary to AO. In coming together, AO will achieve instant scale and be well-placed for future opportunities within a highly attractive and growing UK mobile phone market.”

Image credit: AO World

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