Record Number of eCommerce Businesses in 2024

A record year for ecommerce business (1)

2023 has seen the largest growth in e commerce companies since the pandemic in 2020. In our annual ecommerce growth report, Your Ecommerce Accountant has analysed the growth of ecommerce companies from companies house data.

Whilst growth has been exponential from 2017 we have seen the biggest increase yet, with  67,186 new ecommerce business registered in 2023, a jump of 57% on the previous year. A significant factor contributing to this growth is the surge in online shopping for consumer electronics, with consumers increasingly turning to the internet for these purchases, further driving the expansion of ecommerce businesses.

We have analysed the uk e commerce industry data from 2020 to the latest trends to 2023 and found that the rise in e commerce business involved in online retail sales has grown exponentially. The ecommerce industry is now larger than ever and the UK market size keeps growing.

Record Number of Ecommerce companies in the UK

Record number of ecommerce companies in the UK 2023
Ecommerce growth UK

Why has there been such growth in UK ecommerce market

In 2020 there was an explosion in new ecommerce companies and business focusing on capturing the trend of online shopping, significantly bolstered by the widespread adoption of mobile internet access. This growth continued between 2021 to 2022 but in 2023 we saw the number of ecommerce growth to be nearly double that of companies created in e commerce industry in 2020.

The continued trend of online retailing and increased online sales means that those shoppers who went online in 2020 have stayed there and new entrants have entered the market to capture a share of the market.

2023 has been the year of the cost of living crisis and it seems more people are looking to become online retailers as a way of combating the cost of living crisis. in other countries

The UK is the 3rd Largest market for ecommerce and this is set to increase with an expected increase of 7.7% in the value of the largest market for total retail sales being made online.

There has been a continued fall in the focus on physical stores and an increased focus on online stores ande commerce sales. As physical stores continue seeing falling sales, online digital platforms and ecommerce store sales now represent an increased proportion of total retail sales.

In December 2023, the share of online sales slightly surpassed the average of the previous 12 months, standing at 26.5%. This figure notably exceeded the levels recorded before the onset of the coronavirus (COVID-19) pandemic, which stood at 19.7% in February 2020.

How many eCommerce businesses are there in the UK?

As it stands 163,278 active limited companies are involved in ecommerce sales. This does not include those who have set businesses up as a sole trader and this whole market size could mean there are at least double the amount of actual live ecommerce businesses trading now.

During the past year 1.5M domains had already been registered, which represents an increase of 799,000 Ecommerce websites versus 2021. The UK currently hosts 588,000 eCommerce websites.

Uk Based eCommerce Business

Failure rate of ecommerce businesses in the UK

This year we analysed how many businesses created in 2020-2022 were still trading in 2024.

Of the 35,589 e-commerce companies created in 2020, only 12,643 still remain active. That has been a business failure rate of 64%.

In 2021, only 15,278 of the businesses remain active today, with a 53% rate of failure

Of those that were created as recently as 2022 only 56% of them remain active today.

This is a relatively high fallout rate of ecommerce businesses and shows that many still find it hard to convert their ideas into sales. From looking at the data, ecommerce businesses are following the principle of failing fast, with those who start and do not achieve the results then close their businesses within the first year. The challenge of online identity theft and the importance of secure websites are crucial for maintaining consumer trust and reducing the failure rate of ecommerce businesses.

Failure rate of UK ecommerce

Starting an ecommerce business is easier than ever

Starting an ecommerce website in 2024 can be significantly less risky and costly compared to traditional brick-and-mortar ventures. This is mainly due to reduced overhead costs such as staffing, premises, and especially with a dropshipping model, eliminating the need for storing and distributing products.

The current landscape presents an opportune moment to launch a uk ecommerce market venture, with seller platforms, product sourcing, marketing, and business expenses more favourable than ever before.

Platforms like Shopify, Amazon, and eBay continue to streamline the startup process, empowering entrepreneurs to swiftly establish their online store presence and offer products or services.

The popularity of dropshipping is on the rise, thanks to its simplicity in product sourcing, order processing, and direct sales from manufacturers to consumers. This approach eliminates the hassles of product storage, delivery logistics, and inventory management.

Moreover, startup services like marketing, graphic design, and accounting are now more cost-competitive. DIY tools further simplify various tasks essential for ecommerce startups, catering to those preferring a hands-on approach.

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Continued rise of social media marketing and Gurus Driving UK ecommerce growth

Undoubtedly, launching a fresh ecommerce venture in 2024 demands investment and a diverse skill set, especially for solo entrepreneurs or small teams.

Proficiency in ecommerce marketing, accounting, sales, IT, and familiarity with specialized software is crucial for the success of your e commerce venture.

Fortunately, there’s an abundance of ecommerce training programs available, many of which are offered for free. Online guides and the expertise of various ‘ecommerce gurus’—quality may vary—can provide invaluable assistance in clarifying your objectives and honing the necessary skills to achieve them.

What is the forecast for eCommerce in the UK?

Revenue in eCommerce will reach US$110.90bn by 2024. Revenue is expected to grow by 7.51% over the next year.

What's forecast for UK ecommerce companies?

What is the growth of online shopping in the UK?

Online sales were the fastest-growing sector in the United Kingdom in 2019 and internet sales were up 36% on 2017 onwards. Digitally Significant Figure for UK in 2025/2026. Population: 6.7M. Phone connections: 71.8M by 2024.

In the UK, mobile phones have emerged as the primary source of online traffic to retail websites, capturing over 70 per cent of visits. However, their usage appears to lean more towards pre-purchase browsing rather than completing any financial transactions Conversely, desktop traffic, while representing a smaller portion of online visits, has shown higher conversion rates and average order values than mobile devices, indicating its greater profitability in facilitating actual purchases.

What is the biggest eCommerce market in the UK?

The biggest player in Amazon UK is Amazon. The company reported revenues of $1,617.8M dollars in 2023. This list shows all stores which generate revenue in UK. These stores are either nationally oriented, or they only sell in their country or operate globally in different countries.

Ebay, Etsy and Shopify despite competition continue to grow and more customers are turning to similar services on these platforms to start online ecommerce businesses.

Ready to Start your Ecommerce Business? We can help!

Your Ecommerce Accountant are specialist accountants for online businesses. We understand the platforms, software integration and challenges online ecommerce businesses face. Along with fixed-price accountancy services, we provide expert advice to all our clients to help them scale their businesses.

Book a free, no-obligation consultation on your ecommerce venture today!
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Free 30 Minute Consultation

Why not grab a Free 30 Minute Consultation with an Accountant, they can answer any questions you have about your e-commerce or marketplace business, guide you on tax efficiency and see if we can help you.

You Have Nothing to Lose & A Lot to Gain
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