Price Comparison Websites: Britain’s Next Export?

Financial services, period dramas, and queuing are obvious. But as an answer to the question “What is Britain best at?”, “Price Comparison” might not be the answer that leaps to mind first. That said, could there be something in it?

In the increased economic uncertainty of a post-Covid world, as consumers and small businesses tighten their collective belts, there is likely to be an upsurge in interest in reducing bills, and as the Brexit wrangling over Britain’s financial industry proved, it is clearly possible for one country to accumulate know-how to an extent that it can dominate at least the European market.

So is there an opportunity for British firms to export the price comparison model overseas? There is certainly precedent in other market segments such as human capital & recruitment (another area Fairgrove has worked in extensively), where internationally the market is dominated by firms from anglophone countries, and Hays and Michael Page (alongside other, smaller businesses) have been successful in exporting their model.

Admiral has taken the first steps to internationalising a successful model – Penguin Portals is operating Confused.com in the UK (founded 2002), Rastreator.com in Spain (2009), and LeLynx.fr in France (2010), and further afield Rastreator.mx (Mexico/2017) and GoSahi.com (India/2019). Whilst opportunity and execution are clearly two different things, we think there are a number of reasons to believe that the UK currently has an edge in the price comparison space:

Switching Rates

The UK has a clear lead in the proportion of consumers switching suppliers each year. A lot of this activity has been driven by price comparison websites (PCWs) building awareness of their offerings. Trends in the business markets are similar, with twice as many British businesses switching their energy suppliers annually compared to their German and French counterparts.

Percent of Consumer Contracts Switched Annually

This is borne out in revenue terms; the UK has 5 PCW platforms generating >£100m revenue each (ComparetheMarket.com, Confused.com, uSwitch.com, MoneySuperMarket.com, and GoCompare.com) with combined revenues of c.£1.5bn. The German market, meanwhile, has only 2 dominant players, Check24 and Verivox (the latter formerly owned by Oakley Capital), and can claim to be the next most significant European PCW market. The two PCWs have combined revenues of c.650m EUR and capture 95% and 90% of the German energy and telco markets, respectively.

First Mover Advantage

The UK began liberalisation of its utility markets earlier than our European counterparts; energy liberalisation began in 1996, compared to 1998 for Germany and Spain, and 2007 in France and Italy. The impact of this is clearly seen in the date of the formation of the first price comparison websites in each country:

Year of Founding of First PCW

Private Equity Activity

UK PCW success is reflected in the degree of private investor interest. Excluding financial (e.g. insurance) aggregators, the UK has seen 23 private equity deals over the past 5 years, spread across both B2C (LDC invested in uSwitch in 2013, making a successful exit in 2015) and B2B (examples include ECI’s investment into Make it Cheaper and LDC into Love Energy Savings). This is the same as the rest of Europe put together.

Private Equity Deals in Price Comparison (2015 to Present)

Our Experience

Fairgrove has undertaken a number of projects in this space over the last 5 years. We have worked in both B2C and B2B segments, and looked at products groups including energy and telecoms. We have seen first-hand the level of innovation and growth of the sector in the UK. The industry in the UK has matured, and has generated innovative business models, processes, and technology; our work to-date suggests that businesses in Europe are yet to achieve this level of sophistication.

Based on these indicators we can see an opportunity for UK operators to export their business models into less developed European markets. Should a recession drive sharper focus on spending, and fiercer competition between providers of a variety of different services, this may only increase.

Whether you’re an investor looking to understand the price comparison market further, or an operator interested in strategic advice, please reach out to Paddy Woods Ballard to discuss our experience and how we might be able to help you.