In Focus Commercial Credit
Online strength
UK e-commerce businesses report revenue spikes in excess of 15% since the coronavirus lockdown
Richard O’Donnell Head of consumer and partner, Clearwater International
UK e-commerce 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. Our study analysed the financial
performance of 21 mid-market UK e-commerce businesses (£5m to £250m turnover) across the fashion, FMCG, and beauty sectors from January to August 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 did not trend upwards until early June. The findings reveal companies that
maintained their social marketing budgets reaped the rewards. 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
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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%
sales which may have been seen as a risky move but the strategy has paid off for them. 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,
www.CCRMagazine.com
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. Overall conversion rates have increased
since lockdown began. Strong performance makes e-commerce 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 firms have demonstrated real robustness and strong growth over recent months, which shows there are deals to do. 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. CCR
October 2020
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