ICFG UK hosts live webinar on value drivers in the e-commerce fulfilment sector
ICFG member in the UK, HMT LLP, has 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.
Hosted by HMT Director Ricky Lane, four expert panellists from within the sector also took part in the discussion:
- 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
- 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.
How the e-commerce fulfilment sector has been impacted by recent events
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 please contact Hannah Staples at firstname.lastname@example.org