Tuesday, December 09, 2014

Online distribution of electrical products worth more than £500m by 2018

In 2014, the market for online distribution of electrical products was estimated to be worth around £400 million, representing 3% of the overall electrical products market. The market has seen consistent growth since 2008 as use of online purchasing and mobile technology has increased, and as suppliers have developed online offerings.

The distribution network within electrical products is complex, reflecting a wide range of products and a variety of end users. The largest distribution channels within online sales are electrical wholesalers and specialist retailers, while merchants and DIY retailers are also significant players in this market.

Whilst electrical wholesalers are strong in the sales of electrical products, their online capabilities are less well developed than certain other retailers. Internet retailers’ development of strong online sales platforms has allowed them to gain strength in lighting and appliances in particular. Electrical Wholesalers’ development of online platforms may be hindered by the complex discount systems in place within branches, which can be difficult to implement online.

Important companies involved in the distribution of electrical products via the internet include Screwfix, Rexel, YESSS, B&Q, Currys, Travis Perkins and a number of specialist online retailers, particularly those focusing on lighting and appliances.

Electrical products are increasingly being sourced online, both by contractors and end users and as such the outlook for electrical products distributed via this type of channel remains positive. Companies are also widening the product ranges offered through online channels and creating special online ranges and promotions in order to promote this type of distribution and to appeal to a wider audience.

Future growth, while positive, could be limited by the lack of transactional capabilities of some of the larger wholesalers and the slow uptake by electrical contractors who tend to remain loyal to local wholesaler branches and the discounts they offer. In addition, the traditional buying behaviour patterns of contractors may also delay gains in the Internet sector over the medium term future.

The market for online distribution may also remain limited in certain product sectors, such as electrical accessories, where items are low value, commodity products and distributors hold a constant, high stock level, providing less benefit to pre-ordering. In addition, growth may be limited in some sectors by the technical or specialist installation requirements of certain products, leading to the specialist contractors retaining their position and often buying through traditional channels.

“The internet sector is outperforming other distribution channels in terms of growth and there are increasing opportunities to purchase online as more of the larger suppliers develop their web and mobile sites” said Keith Taylor, Director of AMA Research. “However, the rate of growth will depend on the attitudes and opinions of electrical contractors and their propensity to use the new media.”

In the medium term, the internet electrical products market is expected to continue to outperform the overall electrical products market, increasing by 37% between 2014 and 2018 to achieve a market value of £549 million.

The ‘Electrical Products Distribution Market Report – Focus on Internet – UK 2014-2018 Analysis’ report is published by AMA Research, a leading provider of market research and consultancy services within the construction and home improvement markets. The report is available now and can be ordered online at www.amaresearch.co.uk or by calling 01242 235724.

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