RANGE REVIEW: LIGHTING & ELECTRICAL


GROWTH IN ONLINE


AMA Research takes a look at the huge growth in the online distribution of electrical products, as the market moves towards omni-channel distribution and pure-play traders like Amazon and Ebay offer tradesmen an attractive alternative.


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n 2017 the market for online distribution of electrical products was estimated to be worth £1.3billion,


around 8% of the overall electrical products market and representing almost 300% growth on 2012 – compared with growth of 20% within the overall electrical products market over the same period. This significant growth can be attributed to the fact that leading wholesalers, as well as both trade and DIY distributors, have expanded their internet presence in recent years, launching transactional websites and starting to move towards ‘omni-channel’ services. The increasing use of click & collect has also made a significant difference to the way contractors purchase; allowing them to combine the convenience of on-site ordering with collection from a convenient store at a convenient time. The e-tailer sector is the largest distribution channel of electrical products online, with around 42% of market value. As internet retailers have developed strong robust sales platforms, it has allowed them to gain strength recently - in lighting and appliances, in particular. Distribution channel shares within online sales of electrical products have been estimated based on the primary destination of products supplied by manufacturers, importers and other original suppliers, though some double counting cannot be avoided. The major competitive channel and one that could, in the future, increase its position is the electrical wholesaler channel. The larger wholesalers and merchants are expanding and developing their online offering and ultimately, this development could swing internet sales in favour of these channels,


DIY WEEK 24 NOVEMBER 2017


with branch networks suitable for click and collect, as many contractors favour convenience and service over pure cost. While offering limited supply of electrical products, more general retailers are also important and increasingly improving and expanding their online offerings, and now routinely offer online ordering with quick, often free, delivery, in-store returns and click & collect services.


In general, the market is starting to move toward ‘omni-channel’ distribution, whereby customers can access information, goods and services via multiple platforms and channels, incorporating a lot of information and customer service into processes, with a focus on the overall customer experience across several channels within one transaction. Companies are also widening product ranges offered through online channels and creating special online ranges and promotions in order to appeal to a wider audience and promote sales via this channel. There are also other factors which are driving forward the growth of the online sector such as the presence of retailers such as Amazon and Ebay in this area. Both companies are vast and Amazon in particular is very efficient with regard to distribution and logistics, making this an attractive alternative for the tradesmen who want to get their products delivered within the next day or so.


In terms of electrical accessories and some lighting product areas, there has abeen substantial recent growth in the ‘pound shops’ sector, with organisations such


as Poundland, Poundshop and Wilko etc. driving fast growth in this area. That said, their focus on the electrical sector is limited to lighting and electrical accessories in the main.


Online will not remain the minority channel Going forward, the market for electrical products sold online is expected to continue to outperform the electrical products market and is forecast to increase by 57% between 2017 and 2021. Growth is likely to remain strong, although limited by the lack of growth in the electrical products market overall, caused by stagnation in construction due to uncertainty


automation, where direct ordering is more prevalent, may have more limited online potential. Conversely there has been substantial growth in product areas such as lighting, where there are many alternative online sources for different lamp and fitting types, offering a vast variety of styles and products. Other product areas within the sector, where the online sources may offer a very practical alternative, include electrical accessories and power tools, where the product knowledge is already reasonably high and there is a degree of confidence in buying the products online. An increasing number of electrical contractors now use mobile technology, such as smart phones and tablets, while on site in order to do product research, check product availability, locate nearby stores and check product prices; and it is indicated that click & collect and online ordering via mobile technology has much more potential for growth. There will probably always be a need for trade counters and bricks and mortar stores and there have been developments to these in order to adapt to new trends. In some cases, stores are being


in the overall economy. The market for online sales may remain limited in certain product sectors such as electrical accessories, where items are low value, commodity products and distributors hold a constant, high stock level, providing less benefit to pre-ordering. Specialist sectors, such as fire or


redesigned as showroom facilities, with staff available to help with specification and product knowledge requests and free wifi offered to make online ordering easier. Nevertheless, it is unlikely that the internet sector will remain the minority channel in the long term.


More information is available in the report ‘Electrical Product Distribution Market Report - Online Focus - UK 2017-2021 Analysis’, which is published by AMA Research, a leading provider of market research and consultancy services. The report will be available soon and can be ordered online at www.amaresearch.co.uk or by calling 01242 235724.


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