The number of online retail or "e-tail" M&A deals has hit a five-year high, according to new research by city law firm RPC.
Eight deals involving online retail businesses closed in 2016, whereas only three were completed in 2012.
Halfords' £18m acquisition of online Bike retailer Tredz and the £13m acquisition of World of Books by private equity firm Bridges Ventures were two of last year's biggest deals.
The growth in internet sales has driven the rise in e-retail M&A deals. Traditional retailers are keen to expand their online presence and existing e-tailers are wanting to increase market share and expand their portfolios.
Karen Hendy, a partner at RPC, said: “The online retail sector is growing at a very fast pace, and we expect M&A activity will continue to rise.”
E-retail M&A is bucking the overall trend in M&A retail deals. M&A deals in the retail sector fell by 23 per cent in the last year to 36 deals, compared to 47 in 2015.
Companies adopting a 'buy and build approach' and acquiring established e-tailers are cutting down on costs and time.
“These established e-tailers, which are not typically rebranded after sale, are an attractive prospect due to their branding, established customer interface, customer base or simply the team behind them,” Hendy pointed out.
RPC says in the last five years 35 per cent of e-tailers sold have been bought by traditional retail companies. For example, UK optician Vision Express purchased Lenstore.co.uk in 2013. Nearly a third of the e-tailers sold were purchased by other e-tailers, including PrettyLittleThing which was bought by Boohoo in December 2016.
“By buying in brands and expertise in e-retail, businesses are ensuring that they are staying relevant and keeping up with what is the biggest growth area for the sector,” Hendy added.