Boohoo is acquiring the Debenhams website for £55m (paid in cash )

On the face of it, it seems a bit odd...

Target customer:
- Debenhams: aged 45 - 55
- Boohoo: aged 16 - 24

Bit like when your parents start using tiktok, right?

Here's why they're doing it (thread )

1. A marketplace (this is the big one)

A marketplace model is where third parties can sell their own products through the marketplace (think @amazon and @ebay).

Boohoo would own the marketplace and third party brands would sell through them. Operationally, it's smart.

Why smart? Because as a marketplace, Boohoo can sell thousands of brands without needing to stock the products.

The 3rd party brands hold stock and sell it to the end customer through the platform. Boohoo will just collect a fee on every transaction.

It's a high margin model.

Online marketplace spend is expected to grow 50.1% by 2024.

The online UK fashion market grew 26% last year.

Big numbers.

The Debenhams website will be the platform behind Boohoo's new marketplace.

It will initially stock both Boohoo and Debenhams own brands to get things moving.

Once they're getting traction (which shouldn't hard - Debenhams is/was a top 10 retail website in the UK), they'll open up to an *unlimited number* of 3rd party brands.

2. Entering the beauty, sports and homeware market

These markets are closely aligned with fashion and the acquisition of Debenhams (who is a leader in many of these) will accelerate that entry.

This will likely go through their new marketplace too.

3. Increasing revenue growth

I think this one was to keep investors happy

So, all in all, it looks like they're trying to make that shift from "online fashion retailer" to "tech company that sells fashion".

Smart move in my opinion

Makes sense why they bought the website and customer data, but not the physical stores now, right?