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Market Overview

OnBuy Hopes To Be The UK's Answer To Amazon


Amazon (NASDAQ: AMZN) has been the undisputed king of online retail for so long now that it’s easy to believe no other firm could ever topple it from its throne. 

However, this hasn’t made U.S. behemoth immune from problems. The company has faced a litany of complaints and lawsuits in recent years. In September 2019, employees at its Seattle headquarters staged a walkout over the firm’s climate policy, or lack thereof. The company has also long been criticized for its poor record on worker’s rights. That came to a head in April of last year in France when it had to close all six of its warehouses following a dispute with workers over a lack of effective measures to help them avoid catching COVID-19. Subsequently, a French court threatened to fine the company €1 million ($1.2 million) per item if it shipped anything but essential products.

The latest incident in a catalog of woes came at the start of November when EU regulators filed antitrust charges against Amazon. This time, it’s accused of abusing its position as an online marketplace that also sells its own goods. The filings allege that the company has been copying products from its sellers and then undercutting them on price. 

Even if this latest lawsuit fails to hold water, the fact is that Amazon’s dual role as both seller and marketplace operator puts it at odds with the merchants using its platform. Amazon writes its own algorithm, so any seller can be sure that even if Amazon isn’t copying their products, it will push its own equivalents to the top of the list that we see when searching for items on the site. 

At the same time that the company is facing potential regulatory hurdles, the company is also dealing with more competitors than ever. 

In the U.S., companies like Walmart Inc (NYSE: WMT) and Target Corporation (NYSE: TGT) have made heavy investments in e-commerce operations to compete with Amazon’s head start, while other e-commerce natives like Wish-parent ContextLogic (NASDAQ: WISH) have stepped onto the field.

In Asia, Alibaba Holding Corp (NYSE: BABA) remains the dominant e-commerce player, though the company is also facing some questions about its size, and Africa has Jumia Technologies (NYSE: JMIA). 

In the UK, OnBuy appears poised to grab market share. The company has positioned itself as an e-commerce platform that is more favorable to sellers. OnBuy was founded by serial entrepreneur Cas Paton in 2016, and has since grown the business by 24,000%

A Seller-Centric Approach

OnBuy seeks to differentiate itself from other marketplaces in several ways. Perhaps the most immediately apparent differentiator is its approach to the sellers on its marketplace. OnBuy commits to never selling its own goods on its platform, meaning it will never compete with its merchant network – or face the kind of antitrust charges with which the EU has recently slammed its biggest competitor. 

In April, as the coronavirus pandemic broke out across Europe, Amazon put a hiatus on UK third-party sellers of non-essential products shipping to its warehouses. OnBuy, by contrast, provided a lifeline for online retailers, committing to waiving its standard seller subscription fee for three months for new sellers affected by the restrictions. It also didn't limit what kinds of items could be sold on its platform overall, ensuring independent businesses weren't disrupted, no matter their choice of inventory. The company now has around 600 new retailers joining every month, thanks to its seller-friendly approach. 

In July, the firm successfully secured £5 million ($6.7 million) in Series A funding led by London-based VC firm Fuel Ventures. Two months later, OnBuy unveiled its plans to take the company global. By the end of 2021, it will have launched 42 more websites in countries outside of the UK, with plans for expansion to a further 100 countries by year-end 2023. 

It’s forecasting a rate of fifty-fold growth within the next four years, indicating it has plans to offer 525 million products on its platform when fully globalized. Given that the company’s third-quarter results show that sales grew by over 800% in November 2020 compared to November 2019 – even before the lucrative Black Friday sales and subsequent Christmas shopping season – that fifty-fold growth could prove to be achievable. 

Amazon is among the biggest companies in the world, and that is unlikely to change anytime soon. But that doesn’t mean they are invincible. Between regulatory threats and a rising crop of competitors, they may find it harder to crush competitors like they’ve been doing for the past 20 years. 

Disclaimer: the writer does not have any relationship or vested interest in OnBuy. This article is for educational purposes and does not constitute financial advice.  




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Posted-In: Amazon e-commerce OneBuyGeneral