Industry update: E-Commerce

The landscape for e-commerce has changed substantially since the arrival of the COVID-19 pandemic. As consumers and governments start to move past lockdown restrictions, retailers are faced with a new future vastly different to what they once knew.

According to the Office for National Statistics, the proportion of total UK retail sales conducted online grew from 19.1% in February 2020 to 26.4% in April 2022. This shift has prompted a wave of e-commerce-related M&A throughout the period. With online retail consumption habits likely to persist long term, significant acquisition and investment activity is expected as firms seek to take advantage of new digital ways of doing business to bolster their market positions.

Key takeaways from our report include:

• The UK is the fourth largest market for e-commerce globally and the largest in Europe. (Source: eCommerceDB)
• In 2021, the largest player in the UK e-commerce market was Amazon, followed by Tesco and Argos. (Source: Ibis World)
• New sales channels such as mobile commerce and social commerce are gaining traction and changing the dynamics of how e-commerce is transacted.
  • 65% of e-commerce orders in the UK are placed on smartphones. (Source: Statista)
  • Smartphone apps estimated to have a conversion rate 157% higher than websites.
  • 71% of consumers are more likely to make a purchase if referred to a store from social media. (Source: Hahnbeck)
• AR becoming a key player. 60% of shoppers want to visualise where and how a product can fit into their lives. (Source: Think with Google)
• 80% of consumers considering sustainability an important factor when making purchasing decisions (Source: IBM)

We expect these figures to impact the sector in the following way:

• Companies will reassess their portfolios and try to take advantage of segments that intersect online shopping and sustainability, we expect more detail activity in this area.
• Social commerce will become an important part of marketing strategies for e-commerce businesses, with firms anticipated to increase investment into digital and social media marketing to reach a wider audience.
• Deal activity is expected from both trade and financial investors seeking to acquire and develop AR technology
• The growing significance of mobile commerce is expected to drive M&A activity and investment from large companies seeking the best digital technologies to integrate in their retail platform to attract consumers.