UK ecommerce companies have seen significant growth, both in revenues and repeat orders since lockdown. Firms report average annual revenue increases of more than 15% since April in line with the shift to online retail.
The study led by global M&A advisory firm Clearwater International and consumer data specialists Conjura analysed the financial performance of 21 mid-market UK e-commerce businesses ( £5m to £250m t/o) across the fashion, FMCG and beauty sectors from January to July 2020 compared to the same period in 2019.
E-commerce revenues started to increase from early April onwards. Figures show some businesses then saw week-on-week revenues spike by more than 50%, despite the fact e-commerce marketing spend didn’t trend upwards until early June.
The findings reveal companies that maintained their social marketing budgets reaped the rewards. Richard O’Donnell, Head of Consumer and Partner at Clearwater International comments: “Companies that effectively used their customer data to back up very targeted paid search and social marketing activity during lockdown have been rewarded with far higher sales which may have been seen as a risky move but the strategy has paid off for them.”
Fran Quilty, CEO of Conjura, continues: “E-commerce businesses that held their nerve on social marketing spend during Covid saw weekly revenues rise by up to 60% when compared to 2019. Moreover, the repeat order rates of customers acquired between March and June suggest they will remain more valuable than those acquired before lockdown.”
Paid search has been the most popular marketing channel during Covid. All the companies surveyed raised their budgets, and by as much as 50% in some cases. By comparison, social marketing budgets fell by up to 30% between April and June. But paid social rebounded from late June onwards, spend is now 15% higher than at the same time last year.
O’Donnell says: “Overall conversion rates have increased since lockdown began. Strong performance makes e-commerce very attractive to investors, despite the wider financial headwinds in the economy. There is still a lot of appetite among private equity to do deals in this space, but they will only want to invest in the very best businesses. This study illustrates how a lot of e-commerce businesses have demonstrated real robustness and strong growth over recent months, which shows there are deals to do.”
Quilty concludes: “Some speculators worry increases in revenue amongst e-commerce businesses are temporary and more reflective of a lack of options. However, we are seeing recent cohort repurchasing rates that are stronger than before and indicative of high value long-term customers.”