Online-only retailer Everything5Pounds was born out of a chain of discount fashion stores seven years ago. After the recession its founders were struggling to compete in an increasingly challenging market. So with little to lose they spent £2,000 on a website to try their luck selling online.

Within the first nine months the online business turned over £9 million. "As soon as the website took off, we ditched the outlets within the first five months,” says its chief operating officer Robert Kulawik. The company is now on track to hit a turnover of around £40 million next year and has The Only Way Is Essex star Georgia Kousoulou as its corporate face.

The site sells merchandise from around 500 brands, which it buys from retailers when stock reaches end of line. Although items are advertised unbranded to prevent undercutting retailers still selling the remaining stock.

However, because its margins are so low (as the name might suggest) it has to run as efficiently as possible. For its last full financial year accounts on Companies House, it made a loss of £6.4 million – mainly due to a series of investments. The year before it made a profit of £323,215.

“Operating on a very low margin forces you to look everywhere for savings,” says Kulawik.  Facebook remains its main channel for promoting stock, as its page creates a lot of self-generated content. “Sometimes our social following will shout it out loud for us if they’ve got a really good bargain on a particular brand. So we cannot be blamed.”

Power of start-ups

Reliable technology is crucial for processing its high turnover of inventory. "The business operates a bit like the flash sale website," he says. "We are finishing implementation of SAP Hybris so we can cope with massive volume, and we’re hosted on AWS. But when it comes to merchandising and cross-selling, we really believe in the power of start-ups.” It's a win-win situation, he believes. The SME gets a high-volume customer and in return Everything5Pounds gets a more personalised service and pays less.

eCommerce search engine Pricesearcher is a case in point. "Pricesearcher wanted to leverage the gap in the market created by the lack of Google shopping ideas. Their solution is independent… and in time the proposition might rival Google when it comes to comparing the offers.”

It’s early days yet, but Kulawik says they are already starting to see referrals from the site.

Everything5Pounds also uses start-ups for its pop-ups, recommendations, and cross-selling. "Instead of going for one big package that does everything and costs us a lot of money, we tend to go granular and look at each function."

“There’s been a lot of recent hype in AI around algorithms – and we’d be keen to choose someone who is just trying to break into the market."

The company has grown a lot since it was just Kulawik and one other running everything from accounts to HR, IT, and all of the logistics. Nevertheless remaining lean and agile is still very much part of its DNA, he says. Which could be another reason the business appreciates working with start-ups so much.