UK online marketplace spend set to double by 2024

In contrast to the many multichannel retailers that are struggling, online marketplaces continue to thrive, with spend set to rise by £13 billion over the next five years, according to GlobalData.

The analytics company’s latest report revealed that this substantial rise in online marketplace spend will increase the threat to retailers that are not currently selling on marketplaces. The range of products sold on these sites extends this risk to most retailers, and those that are better protected will be ones with their own marketplaces, such as ASOS and Next.

Emily Salter, retail analyst at GlobalData, commented: “General merchandisers Amazon and eBay dominate the online marketplaces market and are forecast to account for over 90 per cent of spend in 2019 as their reputations, huge product ranges and fulfilment options make them the first port of call for many shoppers.

“Spend on brand new items will rise at a faster pace than spend on second hand products over the next five years - 53.9 per cent versus 29.8 per cent - and the prominence of Amazon and eBay will significantly contribute to this as retailers look to these marketplaces as a growing revenue stream.”

Clothing and footwear is suited to second hand retail, and will become more important as consumers focus on cost and sustainability, according to GlobalData. Despite growing concerns surrounding sustainability, spend on second hand products is forecast to make up less than 20 per cent of total online marketplace spend in 2019 as few sectors lend themselves well to resale.

Salter added: “Growth in the second hand market will be driven by sites dedicated to resale - in particular Depop, which looks and functions like Instagram with an intuitive and attractive app design that appeals to young digital natives.

“The presence of unique and often vintage items, lower prices, and the concept of ‘social shopping’ appeal to 16 to 24 year-olds and are alternatives to the ubiquitous model of fast fashion and big brands.”

Separately, GlobalData’s deals database has showed that total retail industry deals for September were worth $7.52 billion globally, marking a 94.9 per cent increase over the previous month and a rise of 38.6 per cent when compared with the last 12-month average of $5.43 billion.

In terms of number of deals, the sector saw a rise of 15.1 per cent over the last 12-month average, with 145 deals against the average of 126 deals.

In value terms, Asia-Pacific led the activity with deals worth $5.14 billion.

The top five retail deals accounted for 72.7 per cent of the overall value during September, with the combined value of the top five retail deals standing at $5.47 billion, against the overall value of $7.52 billion recorded for the month.

The top five retail industry deals of September tracked by GlobalData were:

• Yahoo Japan’s $3.72 billion acquisition of Zozo.
• The $750 million acquisition of Jetro Restaurant Depot by Fomento Economico Mexicano.
• GIC’s $500 million private equity deal with VCM Services and Trading Development Joint Stock.
• The $300 million venture financing of Zhuan Zhuan by and Tencent.
• Glade Brook Capital Partners, TCV and Thrive Capital’s venture financing of Capsule for $200 million.

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