Despite the prediction that the UK economy will shrink 13% in 2020 in the face of the declining high street, and the impact of COVID-19, online retail is surging. In August 2020, Jeff Bezos, CEO of Amazon, was announced as the world’s very first person to be worth $200 billion.
The Business Finance Guide spoke to Gwen Curtis, owner of independent fashion boutique Ellie & Bea, about her experiences entering the world of online retail – or e-commerce – in 2020.
NOTE: This article was first published in October 2020. Dates and facts relating to government restrictions on retail in relation to COVID-19 were updated on 3rd November 2020. Please check the government website for the latest information and guidance on staying safe from COVID-19.
How did Ellie & Bea start?
I’m passionate about fashion. I have a sales, marketing and project management background, and started Ellie & Bea after I’d had my children. I was confident that I knew the right products to buy and how to sell them. I tested my concept with pop-up shops, then I took on a market stall. I loved it, and it was really successful. I decided that I was ready to take on a boutique of my own.
My knowledge grew quickly with my business and it had to. I faced the challenges that all retail businesses do, of managing stock, cashflow and inventory. I had the support of my husband, an accountant, throughout and I’ve learned a lot about the process of retail.
I didn’t originally set out to start an e-commerce business – that’s a new development, but an exciting one.
How did Ellie & Bea move online?
I’m not a digital native by any means – that was honestly one of the biggest tests of selling my products online. Creating websites can be challenging, because dealing with digital agencies and website builders isn’t necessarily my primary skillset, or that of many fashion retailers.
Digital is like a different language. There’s a lot to understand, and so it’s always worth having somebody that can essentially translate to you in plain English what your website builder is describing, to ensure that you get what you need. I needed a website for the boutique, firstly as it was a good standard business practice. Then I started to sell products online and it’s really grown quite quickly since.
How did COVID-19 and the subsequent lockdown affect your business?
Very simply, like everyone else, I had to close my store. However, my online sales have grown by 700% since April 2020. The challenges that I faced were totally different in terms of the demands on stock and fulfilment. I landed a small-brand, high-demand item from a Scandinavian designer. Sales of it were so strong that I was suddenly pushed to have enough stock to fulfil orders. I needed cash (working capital) to allow me to pre-order stock.
And my buyers had changed too, beyond all recognition. Orders were now coming from all over the world. The internet is global, and while we accept that in terms of searching for information or talking to each other, it’s a surprise when it’s someone placing an order with your business. I’d never considered that we would trade internationally, but that’s what we’re doing.
We’ve now had orders land from as far away as Melbourne and Hong Kong, and that’s a really exciting feeling.
A change in the balance of retail trade
The Business Finance Guide spoke to Iain Wright, Director for Business and Industrial Strategy at ICAEW, for his insights. A chartered accountant himself, Wright was the Member of Parliament for Hartlepool in a career in politics that spanned from 2004 to 2017.
“What’s really interesting to me is the way that, in terms of business practice, coronavirus has in one respect changed the world and in another it hasn’t. The move away from the high street to online retail has been going on for years. It has been discussed long before the recent commentary on the demise of the high street. What we’re seeing is the COVID-19 pandemic really accelerating the trend. I don’t think that physical retail will ever end, but I do think that it will have to change.
“It’s fascinating to hear Gwen’s story, and her success is to be celebrated. I think that we’ll continue to see the number of retail transactions made online (even for independent retailers) continue to grow. Ellie & Bea is a great example. Maybe Gwen will see more of trade continue to come from online, where the world really is her oyster in terms of customers.
“At the same time, there is a place for real quality in a local environment. That experiential element to retail is often well served by independents on the high street. I think it will be a case of knowing and planning for those different customer bases. Perhaps after COVID-19 the bulk of an independent retailer’s trade will come from online.”
Three top tips for boutique retailers moving towards and learning to embrace e-commerce
We asked the owner of Ellie & Bea for her best advice to independent retailers moving online:
- Learn, understand and develop an armoury of social media skills. You’ll need all of them to keep up with the demands of your market. If you can harness the power of social media, your sales will skyrocket.
- Research and invest in the best tools for the job in terms of your website. I use Shopify because it integrates with all of my inventory and bookkeeping software and means my business can function seamlessly.
- Stay on top of stock, cashflow and inventory. When you discover that you have a really popular item of stock, be ready to fulfil all of those orders and keep in mind that they might come from all over the world.
E-commerce up 83% in just two weeks
The first two weeks of April 2020 saw the UK’s e-commerce sector up 83% year on year compared to 2019, and the coronavirus and government-imposed lockdown was undoubtedly a major factor.
A captive and in some cases furloughed market, while worried about money, had little else to do but buy online – and shopping figures rose significantly in 2020’s second quarter. A brief rallying of the UK high street was recorded in July, but this has since fallen again, while the UK’s online retail sector is predicted to deliver annual growth of 10.96% compared with 2019.
Amazon remains the dominant force in the e-commerce market, with 69% of the UK’s online customers buying from it and other online marketplaces. A further demonstration of the seismic shift in the nature of consumer buying is in fashion retail, where 60% of the UK’s purchases are made online.
Other areas that have seen an increase in their sales performance online include household items like furniture, as well as groceries, movies, music and computer hardware.
Can the trend continue? And is there scope for more of the UK’s businesses to cash in online?
Preparing a business for growth
According to Iain Wright, “the single best and most important piece of advice I could give any business that is experiencing or is planning for growth, would be to seek the guidance of a trusted professional at the earliest possible stage. There are key players in a business’s growth. An accountant and a finance provider should be right at the top of that list. Both can help you plan for growth in a sustainable way. More importantly, they can help a business to avoid making really costly mistakes. Those mistakes are often magnified in tough times, such as the ones that we’re experiencing now.
“In small businesses, I have observed that there can be a resistance to seek finance in order to grow. Perhaps it’s still with an eye cast backwards towards the global financial crisis in 2008, that businesses have an aversion to what they view as the risk associated with borrowing. They worry about servicing debt, and in terms of equity finance, don’t want to give away what they have worked hard to achieve. When it comes to growing a business, this is where that professional advice is so vitally important.”
That expertise will help businesses to:
- Manage risk
- Know and understand the businesses limitations
- Benchmark appropriately
- Fill any gaps in the businesses process or knowledge.
“Business growth is in all of our interests. And sometimes not seeking professional advice is what actually limits a business. I have seen really successful businesses reach a plateau and stay there. I would urge anybody planning to grow or experiencing growth to seek professional advice, even if it’s just to understand what’s possible.”
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