Sales at the UK’s 20 biggest online-only retailers have reached a record £16.4bn in the last year, rising 22 per cent from £13.2bn the previous year, according to calculations based on Companies House data.
This growth continues to be driven by the success of fashion retailers, which increased their revenues by 14.2 per cent to £6.9bn in the past year, City law firm RPC found, sharing its findings exclusively with City A.M. this morning.
Boohoo reported sales of £1.7bn in the year to 28 February 2021, up 41 per cent on the previous year, while sales at ASOS grew 19 per cent to £3.2bn.
The growth is driven by strong demand for products such as casualwear and athleisure during the early stages of lockdown, and “occasion” wear when restrictions started to ease last summer.
Other high-performing online retailers include electrical goods retailer AO.com, which saw the biggest growth with a 62 per cent jump in sales to £1.6bn. The Hut Group, which owns brands including Myprotein and Lookfantastic, saw a 41.5 per cent rise in turnover to close to £1.6bn.
Marketing and CAPEX
Whilst the online sector has been helped tremendously by the tailwinds provided by the lockdown the e-commerce companies have also benefited by its willingness to invest heavily in marketing and CAPEX to help deliver growth, explained Jeremy Drew, co-head of retail at RPC.
For example, online retailers have been investing heavily in tools such as augmented reality to enhance the shopping experience for consumers. During lockdown ASOS unveiled an augmented reality tool on its website which digitally fitted clothes onto models to show how they could look when worn.
“There’s no doubt the pandemic has accelerated the growth of online retail. However, e-retailers still deserve plaudits for capitalising on that sudden shift by dramatically adding to capacity,” Drew told City A.M.
“As social distancing eased, physical stores have mounted a fightback showing they are a key part of the retail mix,” he added.
Social media presence
Another way online retailers have been able to drive sales is through more effective investment in their social media presence than some of their High Street rivals.
Online retailers have typically been quicker to partner with influencers than some of the more traditional retailers. Drew said this has enabled them to generate a higher level of engagement on social media and better sales growth among a younger demographic.
For example, Boohoo has over 8.2 million followers on Instagram, citing the success of its social media outreach as a key driver of sales.