• Jini Kong

The number of struggling online retailers in the UK has increased by 65 percent since 2016

Angela Gonzalez-Rodriguez | Monday, December 23 2019

New York – Retailers struggles to stay relevant in an ever-competitive marketplace have permeated the online world. According to a recent report, the number of online retailers in distress has risen by 65 per cent over the past three years to 9,000.

Data analysed by insolvency firm Begbies Traynor show that while there are significantly more high street retailers in distress, at 17,893, this number has plateaued since last Christmas.

The market expects the number of online retailers in distress to continue accelerating in 2020

“Looking to 2020, it seems as if the accelerating numbers of online retailers in distress will continue,” Julie Palmer, a partner at Begbies Traynor, said. “The competition online is ferocious but the rewards for those that succeed, such as Boohoo, are huge,” reported ‘Business Matters Magazine’ (BMM.)

Non-food online sales, which account for a third of the market and are largely driven by apparel, fell by 10 percent in November, according to the British Retail Consortium and KMPG. The decline was blamed on Black Friday falling a week later this year.

Notably, some of the UK’s online retail champions have struggled to keep their sales and margins levels, with the likes of ASOS issuing two profit warnings on the back of glitches at its overseas warehouses and Boohoo’s spending 90 million pounds on marketing this year — equivalent to 9 percent of their total sales — in an effort to lure more younger shoppers.

John Stevenson, an analyst at Peel Hunt cited by BMM, said that the dominance of Boohoo and Asos made it difficult for smaller internet retailers to compete. “The biggest issue most online retailers face is getting in front of the customers,” he said. “If you are selling a similar type of product to younger customers as Boohoo and Asos you don’t really stand a chance because they are spending millions on social media influencers and Love Island contestants.”

Image: ASOS UK, Facebook official site.

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