HMT Director Ricky Lane recently hosted a live webinar on value drivers within the e-commerce fulfilment sector and how recent events have impacted this space over the past 12 months. Ricky was joined by four expert panellists from within the sector during the session:
- Nick Wells – CEO at leading delivery management company Whistl whom HMT have advised on numerous transactions;
- James Hyde – Co-Founder and CEO at e-commerce fulfilment provider James & James who took on private equity investment from LDC in 2020;
- Alex Snodgrass – Investor at BGF, who recently invested in global fulfilment specialists, Fulfilment Crowd; and
- Pascal Wittet – Investment Partner at private equity house Ethos Partners who are invested in a number of companies who use outsourced fulfilment (Pet Mate / Motocaddy) and are actively seeking to invest in the sector.
Ricky and the Panelists explored four main topics during the webinar, looking at the macro-economic impact of both COVID and Brexit on the sector, the use of technology and M&A value drivers, as well as welcoming questions from the guests.
Below are the main takeaways from the session.
The impact of Covid-19
- Accelerated five years of e-commerce demand growth in 12 months
- This increased demand will stick post pandemic due to the structural trends towards outsourcing and growth in SME retailers
- The high street will become a place to go as a day out and many will continue to make the final purchasing decision online
The impact of Brexit
- Tightening of the labour market in the eCommerce supply chain due to EU nationals leaving the UK prior to Brexit
- Issues around tariffs / levies / charges and the time it’s taking to get stock across border is making a lot of retailers look for a solution where they can fulfil directly from the EU
- The solution is being provided via strategic relationships with existing continental operators or by setting up greenfield investment in new sites
The M&A market in the e-commerce fulfilment sector
- Not important in itself but important as an enabler to delivering an efficient and cost-effective service
- For institutional investors, the value in the technology is its ability to allow a company to scale quickly without undue reliance on people or capital expenditure
- In the medium term, physical technology within the fulfilment centre is likely to remain limited to the automation of basic tasks to reduce headcount rather than deep robotics and AI
- Trade acquisitions being driven by the ability to buy in unique capabilities and to add scale to drive efficiencies
- Institutional investors believe there is still a significant amount of growth to come in the sector and therefore remain committed to investment
- Multiples are being driven by the target’s ability to use technology to scale, whether their proprietary technology will provide a competitive edge, the vertical that it serves, and the capital-intensive nature of the operation (capex light models attracting a higher valuation)
- Understanding the EBITDA position and demonstrating that the acquirer isn’t buying off the back of a COVID-bump is going to be key for the next 12 months
If you would like to receive a link to a recording of the full webinar session or if you are considering entering an acquisition, disposal or fundraising process please contact Ricky Lane at [email protected]