Sales at UK’s leading online retailers rise 16% in just one year
- Online fashion retailers driving growth in overall sales – up 31% to over £3bn
Sales at the UK’s Top 20 largest online retailers have risen 16% in the last year to £9.5bn, up from £8.2bn the year before*, shows new research from RPC, the City-headquartered law firm.
This growth in sales has been driven by online-only fashion retailers, which saw sales rise 31% to £3.4bn, up from £2.7bn, over the same period.
RPC explains that part of the success of online fashion retailers is due to their agile business models, which have very short lead times between the conception of a product and its listing online. This has enabled these retailers to respond quickly to consumer demand.
Many online fashion retailers can also better track how well or poorly trends are doing in an online environment and adjust their inventory accordingly. This reduces the risk of unsold stock and delivers a steady stream of new products adapted to consumer feedback, further reinforcing demand.
Farfetch, an online fashion retailer selling designer products, saw the fastest growth in sales of the Top 20 last year at 76% to £247.7m, up from £140.8m the previous year.
Jeremy Drew, Co-Head of Retail at RPC says: “Speed to market and perceived value remain some of the most important factors for consumers and the most successful online fashion businesses are clearly hitting the sweet spot.”
“Fast fashion online retailers will continue to reshape how retailers do business as consumers increasingly favour shopping electronically. Through fast turnover of products, these retailers are able to maintain high levels of demand through constantly creating, emulating and reinventing trends.”
“This only adds to the competitive benefits of commonly having lower overheads than bricks and mortar retailers and the creeping tide of armchair shopping.”
RPC says online-only retailers are also launching innovative tactics to help drive growth in sales. For example, these include:
- Try before you buy’ payment methods where consumers can have orders delivered and then pay within 30 days, enabling them to return items and only pay for what is kept. There are often no interest, fees or late charges for these services and approval depends on a soft credit check with non-payment affecting a consumer’s credit score
- Continued investment in social media influencers by sending them free items on the condition that they will promote the brand, often with discount codes for their followers
- Subscription retail services which enable consumers to subscribe to receive periodical deliveries of goods, such as beauty products or food
- Free and straightforward returns processes, removing barriers that may make consumers hesitant to purchase relatively high-value goods without being physically present
The share of shopping carried out online in the UK hit a new peak of 22% in November 2018**.
Karen Hendy, Co-Head of Retail at RPC says: “There is a clear gap between the growth rates in online sales of many high street retailers and online fashion retailers that will not be closed overnight. However, high street retailers are working hard to become nimbler and adopt the technology and marketing tools that have been used by their online rivals.”
“Expect more innovation from both online only retailers and bricks and clicks in everything from easy credit to bespoke clothing. It's great news for the online consumer.”
Sales of online-only retailers jump 16% in one year to £9.5bn
*Based on financial results filed up to June 30th 2019