Under Charles Wilson, Booker is leading UK wholesalers in the online revolution… but others are making up lost ground fast
Britain’s wholesalers have joined the digital revolution. Their internet sales are surging at double-digit rates as retailers opt to log on, rather than pick up a phone or head to their local cash & carry.
And Booker is leading the charge. Its web sales have climbed 21% over the past year to £635m (or 16% of its £3.9bn total). By contrast, Palmer & Harvey expects to turn over £150m online this year, while Bestway says it’s on course to hit £100m in 2012.
This is no one-horse race, though. Booker’s rivals are coming up fast on the rails. While Charles Wilson’s outfit is currently gearing up for a trail of click & collect, Bestway is getting ready for the launch of a Batleys website and the rollout of a new iPhone app and P&H says it’s preparing for a “powerful” new web development in the next few weeks.
P&H is keeping the details under wraps for now, but its broader online aspirations are no secret.
“At the moment about 30% of our business is online,” says Richard Hayhoe, marketing director for P&H. “And we’re seeing average y-o-y internet sales growth of 35%. In Northern Ireland, where we have a smaller customer base, we’ve seen a 206% increase. In the next five years we expect things to flip, so 70% of our customers will be online and 30% will be using EPoS.”
“Eventually we expect over half of our orders to be made via the web. We will roll our web offering out to all our other businesses”
Dawood Pervez, Bestway
It isn’t the only one predicting a seismic shift to online. Several wholesalers believe they are fast approaching a tipping point in terms of online sales - one that could see online transactions account for the bulk of their business one day. But why such interest - and how big really is the size of the prize?
The attraction is not simply that online offers another sales channel, say advocates. It is also that it enables wholesalers to reach new customers, who also, conveniently, tend to spend more online.
Take Bestway Wholesale, the smallest of the big three online retail-focused wholesalers, which launched a transactional site for Best-One customers back in September 2010 and this May launched a new site for non-members, giving it access to parts of the country it previously had no presence in, such as East Anglia. Dawood Pervez, the Bestway director with responsibility for e-commerce, says the new site will hit £1m a week in sales by November and total online sales are on course to realise £100m this year.
“The most exciting aspect has been the number of new registrations and amounts ordered from new customers,” says Pervez. “Sales from new customers are a significant element of web sales and we are yet to commence any meaningful marketing of the site. We are also very pleased with the positive feedback we have received about its user-friendliness and appearance.”
P&H also says a high proportion of its web sales are from new customers (about 30%), suggesting its click & collect offer is turning up the heat on the competition. This incremental growth isn’t just in customer numbers - people spend more online, says Hayhoe, with P&H receiving 28% more per customer online.
“It’s because they can see our full range at the touch of a button and we can show them bestsellers, NPD, link deals and so on. This is driving incremental sales,” says Hayhoe. “At Christmas we launched our barcode scanner and as a result we’ve been signing up new customers. We now have retailers saying they can do their ordering in 25 minutes for a 2,500 sq ft c-store. The pure convenience and ease of use with the web is helping with that.”
Bestway is also looking to launch an app that Pervez says would make things even easier for customers. “We feel there’s an opportunity to harness the power of smartphones via an app and we have plans currently under development ,” he says. “This would help replace the need for hand-held terminals. The web offers the opportunity to present the products relevant to particular customers in a more helpful way for them.”
Bestway is preaching to the converted as far as Booker is concerned. “The retail landscape will change more quickly than people think, partly powered by how people get into the new technology and the web,” Booker CEO Charles Wilson told the Telegraph Festival of Business last September. Indeed, Booker’s 2012 accounts reported a surge in registered online customers of 68,000 to 170,000 and more than a third of the company’s £300k growth last year came from the web.
And Booker e-commerce sales director Jane Day is confident that growth will continue, fuelled by initiatives such as the launch of an iPhone app that allows customers to maximise the rebate they receive through the wholesaler’s Spend & Save discount scheme. “The Booker iPhone app was launched in 2011 to ensure our highest spending customers can maximise the rebate they’ll receive, helping to make them more profitable,” says Day.
“We now have retailers saying they can do their ordering in 25 minutes for a 2,500 sq ft c-store”
Richard Hayhoe, P&H
Booker is also looking to trial click & collect soon, adds Day. “We always want to ensure that the services we offer to our customers will add value to their businesses and we will trial click & collect at some point to understand if it does,” she says. “We’re pleased with our online growth - it demonstrates that we are supporting our customers in a way they need.”
Online also fulfils a key need to reduce running costs. Hayhoe estimates that P&H’s increasing online presence is yielding “significant savings running into seven figures”. And it’s clear where the lion’s share of the savings are being made. “If you can do away with things like paper and postage there are of course significant savings,” he says. “We are looking to become completely paperless if our customers want to be. That’s what we’re going to push this year.”
The internet also allows wholesalers to be more agile when it comes to the deals they offer their customers. In the past, wholesale brochures have been produced every three weeks or so and mailed to customers. Now offers can be revised on a daily basis.
“It allows us to talk to people every day,” says Hayhoe. “It makes us much more flexible in the way we talk to our suppliers. There’s no reason why Heineken couldn’t phone us up and say ‘the weather is looking good this weekend and we have 10,000 cases of Foster’s we need to sell can you do a deal on it?’ It could be that instant.”
So where does all this online growth leave traditional sales channels for wholesalers? We are reaching a tipping point, agrees Bestway’s Pervez. “Eventually we expect more than half of our delivery orders to be made via the web,” he says. “We plan to roll our web offering out to all our other wholesale businesses. Batleys will be online very shortly and our foodservice division is enjoying the success of the website too.”
That’s not to say the web will ever completely supersede telesales or the traditional cash & carry, says Hayhoe, pointing to P&H’s recent appointment of a third party to carry out telesales as proof of the wholesaler’s commitment. “But the internet is becoming more and more important. “This will be a massive year for us on the web.”
Viva la revolution!
Internet sales: £635m (Annual Report 2012)
Booker takes the prize for the wholesaler with the biggest online presence. The cash & carry giant upped its tally of registered online customers by 66% to 170,000 last year. Now it’s gearing up for a click & collect trial, in a bid to further its lead over the rest of the pack.
Internet sales: £100m (projected, 2012)
Best-One customers have been able to buy online since September 2010. Since May, Bestway Wholesale has been selling direct to the trade with a new site. Bestway reckons it will be doing £1m a week through the site by November. Next on the cards for Bestway is an iPhone app, says the wholesaler.
Palmer & Harvey
Internet sales: £150m (projected, 2012)
First dipped its toe in cyberspace in 2009 after it inherited a web presence through acquisitions of WH & HM Young and T&A Symonds. Back then sales were worth just £1m a year. P&H now has 3,700 registered users from the UK mainland and is growing at a rate of 45 new users a week.