The scramble to open eCommerce sales channels during lockdowns turned into a windfall for UK manufacturers, according to new research.
Firms with any eCommerce capability recorded average profit margins 11 percentage points higher in 2021 than those relying on traditional sales channels.
That’s according to analysis by UK-owned software firm Unleashed, which crunched 79,000 data points in its 2021 UK Manufacturing Report.
“That was a major surprise to everyone” said Stephen Jones, the UK & EMEA Manager for Unleashed. “It’s not how eCommerce is supposed to work.
“In the first wave of retail closures lots of UK businesses were left with no way to sell their goods,” says Jones. “Many turned to eCommerce as a way to maintain cashflow but found the added admin and transport costs badly squeezed profits.
“Now it seems that, almost two years on, having an eCommerce channel – whether for selling to business buyers, or direct to the public – lets UK manufacturers become price makers, rather than price takers.”
The study, which analysed sales data of UK firms that use Unleashed’s inventory management platform, found the average gross profit margin across all sectors was 57% for eCommerce-enabled firms, versus 46% for those on traditional channels. Yet a full 62% of all UK businesses still have no digital sales channel in place.
“We think those first lockdowns were a shove in the right direction for manufacturers that moved quickly,” says Jones. “The data shows that a lot of them did well.”
“But with only 38% currently eCommerce enabled, there’s a lot of up-side still to be uncovered.”
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