The Crystal Group Comment: Q4 2022
October and November are traditionally busy months for fenestration as customers push to get projects completed before Christmas, but for many suppliers Q4 sales were lacklustre as the cooling off in demand seen in Q3 continued.
As a business, we did somewhat better. November was our busiest month of the year and Q4 our best quarterly sales of 2022. Much of this growth could be attributed to the success of our rapidly expanding ‘drop ship vending’ (DSV) model, as we launched more new partnerships at the end of last year. One difference between drop shipping and the standard model is that in third party online marketplaces the selling merchant doesn’t stock or own its inventory.
While we may be one of the early adopters in the UK windows and doors sector, DSV is rapidly taking off in industries worldwide. Research suggests that third party online marketplaces will be the largest and fastest-growing retail channel globally between now and 2027. Sales through these online marketplaces – such as eBay and ManoMano – could account for as much as 59% of total global eCommerce in that time.
For builders merchants, the DSV model allows them to add more products and unlimited choice to their online offer without having to hold additional stock. There are fewer touch points, and fewer opportunities for things to go awry. Third party suppliers like us simply fulfil orders and deliver directly to the customer while the merchant makes a commission.
Younger, Millennial and Gen Z tradespeople want to order products online or on an app and have them delivered to site for maximum convenience and minimal effort. Merchants need to evolve the clicks and bricks model to appeal to this market.
We are excited about what lies ahead in 2023 with this broadest omnichannel approach. Talk of a recession may hit consumer spending, but there is always a solid base of customers with money to spend on home improvements. Until the cost of gas and electricity comes down, we’re likely to see a growing trend towards products with higher u-values to help cut energy bills so ensure these are front and centre to tap into that sales potential.