OnBuy may be into its third consecutive year of 600% sales growth, but for Cas Paton, founder and CEO of the Poole-based online marketplace, this is just the beginning. “Next year is when we really begin,” says the 36-year-old entrepreneur.
Launched in 2016, the marketplace has ambitions to secure up to five per cent of the £84bn UK eCommerce market in the next three years – not to mention, it’s about to embark on a worldwide scale up into more than 140 countries by 2023.
It does not hold or distribute any goods, so it doesn’t require bricks and mortar and can scale rapidly without the usual hurdles faced by businesses. It’s not like eBay: all the sellers on OnBuy are businesses. “We don’t compete with retailers, so we get great deals from them; with a single registration, customers can buy what they need, when they need it, from one secure platform. We are almost like an intermediary and we provide a layer of protection to both sides.”
So OnBuy measures its growth by GMV – gross merchandise value – which is the total amount of sales conducted on its platform. The revenue, of course, is the retailer’s revenue; OnBuy earns a commission from each transaction. As part of its fair, transparent approach, OnBuy charges competitive sales fees to better benefit the retailer. It’s the GMV that provides the dizzying numbers: since OnBuy’s launch four years ago, GMV has grown 24,000 per cent. In September 2019, for example, £750,000 of goods was sold on the OnBuy platform; this year it was £5.4m.
But the marketplace business model is tough to launch. Open your doors on day one and you are faced with a massive conundrum – sellers can’t see any buyers, while buyers can’t see anything from sellers.
It is an incredibly tricky job to attract either buyers or sellers to come to an empty marketplace but once – or if – they do, critical mass builds rapidly. Paton believes that this critical mass was achieved in April 2020. Brands such as Unilever, P&G, ao.com, Kimberly Clark and other high street names have joined the platform – in September, OnBuy increased its seller base by ten per cent.
“The way for us to grow is through partnership,” he says. “We are starting a fulfilment network in Europe with many of the world’s biggest logistics companies; so if a seller is gaining traction in France and wants to move products closer to French consumers, they can select a shipper and reduce delivery times, which in turn improves their sales conversion rates. By creating a large retail network through partnership, we can scale ridiculously quickly – and much faster than anything that requires physical infrastructure.”
With 30m product listings in the UK, Paton is now eager to begin expanding internationally. “We expect to be able to penetrate countries super quickly,” he says. “When OnBuy launches into France, the site will already have 1.9m products available for sale.”
The impact of Covid on OnBuy was rather like a fast car bouncing over a speed bump.
“There was an initial negative impact and we lost retailers but after about nine days we saw consumer habits changing and everybody started to buy things like home exercise equipment and health supplements. Sales went crazy for a while.
“Covid has brought a different way of shopping to the planet. It has been the catalyst of eCommerce, as well as making people hesitant about going into shops. I think the high street will remain, but it will change shape dramatically.”
Next year, the workforce looks set to double to 100. The company has just recently started to develop a relationship with nearby Bournemouth University, but Paton feels that locally there has been “a bit of disbelief” about the business. “Our rate of growth has woken people up to our being here. We did get a very helpful grant from Dorset Growth Hub in our infancy but the fact of the matter is that Dorset is a great place to live but not where tech companies typically choose to set up – London is the go-to. It’s been a rewarding challenge to create the world’s fastest-growing marketplace from this corner of England.”
Among the new recruits, OnBuy plans to take 12 Kickstarter apprentices into its marketing department.
“We were planning to take on apprenticeships in 2021 after our next fundraising round, as we had to factor the internal costs of training as well as the increase in headcount. But the Kickstarter scheme expedites this development and so we can bring this forward. I’m really pleased; it makes a good deal of sense as it is government support to help us provide experience and employability. I think the Kickstarter scheme will be extremely advantageous to the economy for the longer term.”
“Covid has brought a different way of shopping to the planet. It has been the catalyst of eCommerce"
Cas Paton, Founder and CEO, OnBuy
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