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There’s little doubt that the pandemic hastened the expansion of the e-commerce industry. It’s forecasted that this year there will be $4.921 trillion in global e-commerce sales. That’s with the UK contributing £185bn of the 87% of UK consumers who have purchased at least one thing online in the last 12 months, placing the UK second to Norway for e-commerce purchases in Europe. According to Nasdaq, by 2040, 95% of all purchases will be facilitated online.
Post-pandemic, the e-commerce industry has seen an 11% increase in Q3 of 2021 alone. The UK has also experienced a higher than average conversion rate against the global 2.4%, coming in third at 2.8%. In the 13 weeks to the 28th February 2021, Ocado saw a 40% sales surge and an overall 39.7% revenue growth to £599m within that period, up by £110m the year before.
A big reason for this growth is the increased web traffic by smartphone and tablets. 6.37 billion people (80.63% of the world’s population) have a smartphone today which makes it easier to shop online, especially with shopping features such as ‘one-touch purchases’. Consumers today are also used to an Amazon-prime delivery service where we expect our products to arrive the next day, if not by 10pm as Amazon offers. With more people working from home, there’s an extra level of flexibility when it comes to online shopping.
Not to mention the quick pace of social commerce (shopping via social media), which makes it easier for individuals to shop, accounting for 3.4% of all e-commerce sales. TikTok and Shopify just announced a partnership to enable in-app buying, merging authentic content and consumerism. The hashtag #TikTokMadeMeBuyIt reached over 4.6 billion views as users shared their TikTok-influenced purchases.
An example of the power of social media when it comes to growing an e-commerce business is We Are Plant Made (formerly Planted), an online hair-repair company. The brand formed last year when Ama Amo-Agyei was fired from her job. Ama threw some ingredients together which grew her hair significantly. Many people asked to buy the products she created which led to the birth of We Are Plant Made. The brand became an online sensation with Ama scaling the company to over £1m in sales within 7 months, purely through organic social media marketing and social proof.
While the market’s rapid expansion is thrilling, and some may argue that it is getting saturated, we are enjoying watching specialised e-commerce brands and marketplaces come to the forefront. These startups are zeroing in on their target market in order to create or sell products that are tailored to their specific needs. In this month’s Investing Insights, we look at the landscape of the industry and the niche startups to watch.
💡 Niche marketplaces are winning.
Marketplaces such as Amazon, ASOS and Zalando are expected to reach an estimated $3.5 trillion in B2C sales by 2024. In July 2020, Walmart’s marketplace more than doubled. What is causing this? Marketplaces are trusted by customers for the latest products whether it be for clothes or DIY tools. With so much noise, ads and distractions online, consumers are looking for one-stop shops. However, more and more people are turning to specific marketplaces to find the products they need.
Niche marketplaces are on the rise and Seedrs has seen a plethora of these types of businesses raising this year. These companies may be small but they are mighty, and they have higher chances of developing personal relationships with their customers. There’s more room for control with curation, studying customer behaviour and working with smaller brands to give them a platform. A win for the marketplace who will benefit from commission or profit on top of the wholesale cost, and a win for small brands gaining exposure. Why are niche marketplaces on the rise? They bring a level of trust from the consumer if a marketplace ‘specialises’ in a product or category, as it is more likely to show you the ‘best of’ rather than the abundance of goods of differing quality you find in generic marketplaces.
BritYard, the online department store encouraging us to #BuyBritish, is a perfect example of this. Its founder, Lara Chant, wanted to create an easier way for the time-poor customer to purchase locally with an emphasis on redefining what it means to buy British. But what cuts BritYard from a different cloth is their hybrid model of retail and high quality content. The online destination is not just a place to shop, it’s a place for independent makers to learn how to market themselves, and for customers to learn more about the people behind these brands. This comes at a convenient time of a recent report by Deloitte stating:
Content management has become critical and has changed the way businesses communicate with consumers. Businesses need to focus on informing and educating consumers rather than solely selling to them. Making as much information available to consumers as possible, will help them move more independently through the shopping journey.
This is part of the reason why BritYard are crowdfunding on Seedrs, they want to introduce journalist-grade written, audio and visual content into their model. As well as enhance their online shopping experience, grow their list of partners and eventually open their own brick and mortar store dedicated to British independent brands. Days away from closing, you can view their campaign here.
Buildiro, a UK-based direct-to-consumer online marketplace for tradespeople and DIY enthusiasts, is becoming the lead go-to source for building supplies and materials in minutes. Availability, distance from the job site and price are the three key factors affecting efficiency and profits for small and medium sized contractors. 79% of UK tradespeople have had to turn down work due to a supplies shortage, costing a grand total of £3.5bn (approx £5,500 each).
Buildiro have created an easy-to-use niche marketplace, now partnering with the likes of B&Q and Robert Dyas on their affiliate program. Since launching in 2019, Buildiro has helped thousands of tradespeople in the United Kingdom source materials faster and sustainably. With over half a million products in its database from thousands of top reputable brands, Buildiro is essentially a professional materials procurement specialist for the independent contractor.
After numerous rounds of successful seed funding, Buildiro are in pre-registration on Seedrs where you can get priority early access to invest in their solutions for tradespeople. Visit the campaign here.
💡 Empowered e-commerce
We live in a time where a business idea can be official within minutes thanks to website building platforms such as Wix, Shopify and Woo – and people are taking advantage of this. Individuals are able to focus on a core product category and turn it into a global business. Between January to June 2021, Shopify processed $79.5bn in order value. This is a stark difference from the $1bn grossed within a 7 year period between 2006 and 2013. There are 3.76 million live websites powered by Shopify with the majority in the US (69.67%), followed by the UK then Australia.
The beauty with e-commerce is that it’s not restricted to just one business type. As long as you’re able to trade money for a product or service online, you’re in the business of e-commerce. Plenaire is a British cosmetic brand focused on a mission to relax beauty practices and combine skincare with self-care. Recently, Plenaire partnered with a UK leading technology service provider to scale the brand online via Plenaire.co, because they understand the importance of enriching the online experience for their customers.
The brand has created award-winning formulations such as their Rose Jelly gentle makeup remover and Violet Paste overnight blemish treatment, both sold out and experiencing a highly anticipated demand for their 2022 restock. In less than a year, the brand has sold 39,000 units, totalling £765,000 in sales, and are now stocked online (and offline) in major retailers such as Space NK, Credo Beauty USA and coming soon to Poosh (Kourtney Kardashian’s brand) e-commerce.
To top it off, they’re now en route to closing a 110% overfunded crowdfunding campaign on Seedrs. Plenaire has managed to secure £332,340 from 66 investors. Their success has come down to not being a brand for everyone, but a brand for those whose values align with beauty and health. With just days left of their campaign, they’re inviting investors to help with their future growth plans including an online subscription and increasing brand awareness. You can view the campaign here.
💡 Sustainability at the forefront
A trend we have seen at Seedrs is marketplaces focusing on sustainable products for the home. We all want to shop more sustainably, but where do we look? This September we saw eco-friendly e-commerce marketplace, Wearth London, raise £226,203 from 253 investors, 150% overfunded. Once again, their success came down to having a specific focus on their marketplace which was eco-friendly products to build a greener future for e-commerce. To date their online marketplace has generated £1.8 million in sales, selling over 180,000 products in the UK and stocks over 250 eco-brands (70% being UK-based). Just a month before Wearth London, Wild & Stone, the home of eco-friendly household products, raised £270,458 (200% overfunded) for their sustainable and natural alternatives to commonly used plastic products!
For The Creators are a circular fashion platform on a mission to reinvent sustainable maternity fashion forever. They believe that pregnant women are being let down by fashion. Maternity and postpartum clothing is too expensive, unstylish and frustratingly wasteful. Founder, Lyndsay Mason, saw firsthand how much women are forced to spend on maternity clothing which they’ll only wear for a short period of time, following the birth of her first child. The most horrifying thing was how much damage it caused to the Earth when these clothes got thrown away. The British fashion industry already sends 350,000 tonnes of unwanted wearable clothing into landfills every year.
Lyndsay decided to create For The Creators, a curated one-stop destination to enable women to build their maternity wardrobe of dreams. Women can rent or purchase barely used clothing from the best maternity and premium brands. This keeps maternity wear circulating in a way that is not wasteful because the clothes are going to someone who’ll wear and love them. The ELLE-praised brand has seen 670% YoY sales growth since launching in November 2020 without any paid marketing. As well as a 40% month-on-month returning customer rate.
Also heading down the subscription route, the platform is raising £130,003 and (at the time of writing this) are 70% there! You can view their live campaign here.
To get in on the action, view some great startups pitching on our campaigns page.