The one-hour delivery company is closing its consumer wing.
B2B services currently account for about half of Urbanfetch’s New York operations and all of its UK business. However, margins on B2B deliveries are much higher, around 50% compared to the 30% on consumer sales. The latter are less profitable because the company has to take on stock-keeping costs, whilst in B2B operations, these are incurred by the outsourcing company.
Urbanfetch’s strategy has been to use its B2C operations to create brand affinity with consumers. It hoped to leverage the brand to gain ‘share of carpet’, and become a frequent, trusted and reliable face with consumers. In turn this brand value can then be leveraged in gaining business clients which may find it cost intensive and inefficient to undertake direct fulfillment.
In its new direction, Urbanfetch’s competitors are likely to include milk delivery services in the UK, as well as postal and courier services. Postal services in particular are likely to develop rapid fulfillment services over the next couple of years. With competition hotting up, Urbanfetch must hope that the strength of its brand has at least bought loyalty from its current customers.
