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Boohoo.com weighing up new fulfilment options

Recently-listed online fashion retailer Boohoo.com has today indicated it is considering launching new customer fulfilment options for online orders.

In an interim results announcement for the six months to 31 August 2014, which showed that sales continue to grow and profit expectations are on track, the e-tailer said that its future plans include establishing alternative collection and return points for orders made online, such as Collect+. The business, which has former Selfridges CEO Peter Williams as its chairman, also stated that it is looking at introducing a text messaging service that would enable customers to amend the delivery point and time during the transit of their product.

Retailers view alternative fulfilment and delivery options as a major differentiator as the competition for share of the online market heats up. John Roberts, CEO of electricals retailer AO.com, recently told Essential Retail that his company's decision to offer same- and next-day delivery early on its development has been a key factor in the business's fast growth.

Much of Boohoo's delivery flexibility is being fuelled by a new £1.5 million warehouse management system, which was introduced in September. The development will enable the company to move from an 8pm to a 9pm cut-off for next-day delivery, while an increasing number of Sunday deliveries are set to be made available by this autumn.

"The system will improve efficiency through optimisation of the pickers' routes using Wi-Fi arm mounted units, improving order management, fulfilment accuracy and stock control," Boohoo said in today's statement.

The e-tailer has also completed construction of mezzanine floors within its existing warehouse in Burnley, which has increased capacity by 56,000 sq ft. Work has commenced on the construction of a £7 million extension to the facility and is on track for completion in spring 2015, which will support up to £500 million of gross sales. 

Mahmud Kamani and Carol Kane, joint CEOs of the business, commented: "Our focus remains on further expanding our international footprint while growing sales in the UK.

"During the current quarter we have managed our marketing spend and growth during the implementation of the warehouse management system and the launch of the fully responsive mobile website. Following the successful execution of these key initiatives, our marketing spend has again increased in line with our targets and we continue to trade in line with market expectations for the full year."

Boohoo's revenue for the six-month period totalled £67 million, which was up 31% year on year, while adjusted EBITDA of £6.8 million was in line with expectations. 

The business's largest market continues to be the UK, where revenue for the six months grew by 47%, but international growth is a key focus for senior management with recent foreign language websites unveiled in Spain and Germany. Today's statement indicated that US sales growth has been "modest", while its Australian operation has reportedly "suffered from adverse currency movements".

Tailoring its offering for particular markets and devices was also part of the strategy over the summer, with the company saying the Scandinavian currency payment options added in June 2014 have boosted conversion rates and sales in the region. Last month saw the eCommerce payment option from Ideal added for Boohoo's Dutch customers and the introduction of a mobile-optimised website to cater for the 57% of sessions that are now executed using smartphone or tablet devices worldwide.

Investec analyst Kate Calvert rates Boohoo as a stock to "buy", saying: "Sales at Boohoo are on an accelerating trend and the company looks well-placed to meet full-year numbers.

"EBITDA of £6.8 million is slightly ahead of consensus and KPIs are improving, reflecting Boohoo's actions to attract and retain customers as well as investing further in the proposition."

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