eCommonSense Comment: Q1 2021

Andy Scothern, Managing Director eCommomSense is BMBI’s Expert for Website & Product Data Management Solutions.

Online trading in Q1 is outperforming even the most bullish predictions. Data from our clients, whose combined turnover is over £1 billion, shows online revenues doubling across the board. Some witnessed three-fold increases from one month to the next during Q1.

Even merchants who have not yet fully integrated their trade accounts are enjoying large revenue increases. While there is a steady migration from in-branch spend to online, most of the new revenues are coming from a buoyant retail sector, reinforcing previous predictions that customers with large amounts of unspent cash would be using it for home improvements as the country opens up again.

Our best performing client on a pound-for-pound basis is already on target to achieve 25-30% of total business revenues online by the end of 2021 – and that is assuming web sales growth levels off. However, if the pace of increase witnessed in Q1 continues, total online sales could surpass off-line sales by the end of the year, which would represent a significant milestone.

Some are reporting gross profit margins for online sales as high as 48% plus a 5% lower cost to serve, in contrast to an in-branch margin of around 27%. This suggests many merchants will be returning some healthy year-end figures.

There is the potential to further increase share of customer wallets by offering advanced online platforms that provide a frictionless customer experience. Merchant customers spend up to 30% of their time organising the collection and delivery of materials, so if they can reduce the amount of unproductive time, they are more likely to buy from one merchant.

To achieve this, merchants need an integrated online solution that can show stock availability at each branch so customers know where they can get their materials.

The future for builders’ merchants with strong online platforms is looking extremely positive with figures showing they can outperform some of the biggest online competitors, especially when they use eCommerce to focus on their geographical trading areas and compete at a hyper-local level.

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