Oddbins e-commerce boosts revenue but eats into profits

Growing online sales and a larger store estate boosted revenues at high street wine retailer Oddbins last year, with turnover rising 19% to £16.75 million in the 12 months to 31 January 2016, according to accounts filed at Companies House this week.

The rising revenue – an increase of around £2.65 million on last year’s figure – was attributed in part to the acquisition of 13 branches of Spirited Wines in May 2014, as well as a 17% increase in online sales.

However, the investment in the e-commerce business and costs associated with growing the store estate hit operating profit, with last year’s £558k loss growing by 56% to -£935k loss. Together, the acquisition and online investment accounted for around 75% of the change, it said.

In the strategic report filed by the company, the company director indicated these investments left the store in a stronger position for the future.

“With new branches now fully integrated into the company and investment in e-commerce operations now bearing fruit, a substantial improvement is expected next year,” the strategic report stated. “The operating result has improved by 25% on last year when adding back the expenditure arising from acquisitions and investment in e-commerce.”

Whittalls Wine Merchants 1 Limited, which is a wholly owned subsidiary of European Food Brokers (EFB) Retail Limited, trades as Oddbins in England, with the smaller Whittalls Wine Merchants 2 Limited trading as Oddbins in Scotland.

Speaking to db earlier this year, Oddbins md Ayo Akintola said the website had been a “slow burn”, although it had grown around 35-40% over the last three years to account for around 6% of Oddbins’ overall business. However Akintola has ambitions to see this rise to 15% and has been investing more resources into building web sales.

The key factor for e-commerce is was in building a web business that is profitable, he argued.

“A lot of people are doing web-based businesses that aren’t profitable – they might have a high turnover but the challenge for us has been that we can’t afford to embark on an arms race for volume sales without it being something that is generating a profit. And it is profitable,” he said.

“There is no point in spending £100 to win a customer who will only spend £50.”

In January,  the online team was boosted with the appointment of Stefan van Rensburg as the new head of e-commerce, joining Oddbins from retailer Cologne & Cotton.