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Understanding the UK E-commerce Landscape and How to Get Ahead

April 29, 2020

The recent turn of events—navigating the post-Brexit transition period and COVID-19 pandemic—has cast a gloomy outlook over the UK economy. 

Yet, against a slowdown in retail sector growth, e-Marketer predicted an increase in e-commerce and m-commerce sales. The e-commerce sector will grow 8.9% this year to reach £114.26bn ($152.33bn), while m-commerce will grow 15.3% to reach £58.05bn ($77.38bn). Amid the economic uncertainties, a window of opportunity is open for UK e-commerce aspirants. This is indicative that growth opportunities remain for UK e-commerce aspirants.

  • An overview of the UK e-commerce landscape (plus essential statistics you need to know)
  • Leading e-commerce players in the UK
  • Tips and strategies for e-commerce aspirants

The UK e-commerce landscape

The UK has the third-largest e-commerce market in the world and the largest e-commerce market within Europe. According to eMarketer, the projected revenue for 2020 amounts to £114.26bn ($152.33bn). 

Several reasons give rise to its growth: the nation boasts of a developed mobile and home connectivity infrastructure, logistical efficiencies, as well as high rates of technology adoption and smartphone penetration. 

Additionally, Euromonitor International research analyst Valentina Vitali attributes the sector’s growth to the country’s financial hub of London. It’s home to a number of multinationals and many mid- to high-income young professionals, and this is reflected in the city’s higher e-commerce spending relative to some of the other countries in Europe. 

The impact of Brexit on e-commerce

Having officially left the EU in January 2020, the UK is now in an eleven-month transition period. For the time being, little has changed as the nation continues to follow the EU’s rules and retains its trading relationship. 

Depending on how the situation unfolds in the coming months, e-commerce businesses may be affected in several ways:

  • Longer delivery times, as well as additional taxes and duties being imposed, will hurt cross-border e-commerce in the region.
  • E-commerce businesses that import any of their supply chain or raw materials from outside of the UK will face a rise in costs and production time. 
  • Consumers are cutting down on their online spending amidst economic uncertainty.

Additional insights 

Top UK e-commerce product categories:

  • According to J.P. Morgan’s 2019 Payment Trends report, the most popular UK e-commerce merchant segments are clothes and sports goods, travel and holiday accommodation, household goods and films and music. 
  • Statista reveals the e-commerce segments with the highest revenue to be: fashion, toys, DIY and hobbies and electronics and media. 
  • GlobalData’s UK Online Retailing 2019-2024 report indicates that clothing and footwear is set to remain the most significant sector for the next five years.

Mobile insights:

  • DataReportal indicates that there were 72.41 million mobile connections in the United Kingdom in January 2020. This is equivalent to 107% of the total population.
  • According to eMarketer, m-commerce—online sales via tablets and smartphones—will represent half of all online sales for the first time in 2020. Mcommerce will grow 15.3% to reach £58.05 billion ($77.38 billion). 
  • Smartphones will continue to be the dominant device used for m-commerce in 2020, accounting for 62.5% of m-commerce sales vs 36.7% for tablets. 
  • E-commerce merchants using these channels should look into implementing payment solutions that offer mobile users security and ease-of-use.  

Digital payments in the UK:

  • A 2019 survey by market research platform Attest reported that 49% of online shoppers used their PayPal accounts to make payments, while 37% used a credit or debit card. 

Leading e-commerce players in the UK

Based on insights from SimilarWeb, the leading e-commerce players in the UK are:

Top e-commerce shopping apps

On Google Play, the top e-commerce apps are eBay, Amazon Shopping, Gumtree Ads and Wish. Amazon, Wish and SHEIN are the most popular apps on the Apple App Store. 

Amazon:

  • Insights firm Edge by Ascential reports that Amazon’s e-commerce market share in the UK is 30.1% (2019). Amazon’s position as a leading e-retailer is unsurprising, given its wide-ranging product categories, competitive prices and convenience.
  • According to GlobalData’s UK Online Retailing 2019-2024 report, Amazon dominates as the most purchased from a retailer across mobile and tablets for the vast majority of sectors. 

eBay:

  • Coming in second after Amazon, eBay has a 9.8% share of the UK online market.

Top e-commerce websites

Amazon UK:

  • Total visits to the Amazon UK site amounted to 317.9m in March 2020.
  • Ecommerce News reported that Amazon is the preferred online platform for apparel shopping, ahead of Marks & Spencer, Asos, Debenhams, Argos, Topshop and Zalando.
  • Insights from eMarketer suggest that UK consumers prefer a blended approach to shopping. As part of their purchase journey, consumers enjoy visiting physical stores. For online retailers like Amazon, this highlights the importance of building out a physical presence. 
  • Amazon has made several attempts to break into the physical retail space and made its foray onto the high street in 2019. In conjunction with small business support organisation Enterprise Nation, it launched a series of pop-up shops in UK town centres as part of a year-long pop-up initiative. 

eBay UK:

Argos:

  • Since its online launch, Argos established an omnichannel approach by way of encouraging in-store pickups.
  • Voice technology is changing the way consumers interact with brands. To adapt to the shift in consumer behaviour, Argos developed a voice shopping service via the Google Assistant platform. Argos customers can now reserve products using Google Home smart devices or their smartphones. 

Top tips for UK e-commerce aspirants

Stay ahead of consumer trends

Tap into social commerce:

The rise of social commerce—the selling of products within social media platforms—is to be expected, given that mobile and social media are increasingly becoming our primary channels for consuming content, discovering products and making purchases. 

This is particularly prevalent among Generation Z and Generation X consumers. A Forbes article indicates that Gen Z consumers spent two to three times more shopping on social channels than the average consumer (with Instagram and Snapchat being the most used channels). At the same time, Gen X preferred shopping on Facebook. 

Additionally, GlobalData revealed that 53.3% of consumers agreed that most purchases made on mobile were impulse buys. It also reported that consumers were more cautious about using mobile devices for larger-ticket purchases. 

These insights point towards a consumption pattern: on mobile, consumers are keen to purchase—without having to consider the benefits and downsides of making a substantial purchase decision. So if you’re just getting started on social commerce, your best strategy is to focus on selling low-cost products.

Optimise your site for voice search:

Voice search is growing in e-commerce; as indicated in an article on retail publication InternetRetailing, 15% of UK consumers used voice search at least once a week in 2019. While the technology is still in its early years, it looks set to become increasingly mainstream. 

To adapt to the shift in consumer search habits, you’ll need to ensure that your site is optimised for voice search. Here are a couple of tips to help you get started:

  • Step into the shoes of a customer service staff, and think about the types of questions that customers typically ask about your products or services. 
  • Provide answers to commonly asked questions in the form of bite-sized content. This will boost your chances of getting featured in a snippet. 

Focus on creating memorable digital experiences 

The growing demand for online shopping presents e-commerce aspirants with a promising opportunity. According to GlobalData retail analysts, UK online spend is predicted to increase by 29.6% between 2019 and 2024. But competition is stiff, and business owners will need to look beyond just selling premium products, towards delivering a memorable digital experience. 

“It’s no longer enough to offer great products or have the coolest store,” shares Angel Maldonado, founder of e-commerce search engine and analytics tool EmpathyBrokers. “It helps, but it all comes back to emotions, to making people feel unique and special. Smart retailers are thinking more about people, relationships and creating memorable and joyful digital experiences.” 

To stand out, e-commerce entrepreneurs need to pay attention to the details, and focus on getting all aspects of their customer’s online experience right.

Be thoughtful and provide personalisation

In the digital age, providing thoughtful touches—through personalised messages, well-thought-out packaging or handwritten notes—can help create a lasting impression on your customers. 

Take florist Beverly’s Blooms as an example: owner Min Young adds a handwritten note to all bouquets that are delivered. She explains: “The notes are just two sentences, but they can change everything.”

Providing stellar customer service is key

Online shoe company Zappos is known for driving consumer loyalty with its winning customer service. Even for SMEs and solopreneurs without Zappos’ vast resources, one can still draw inspiration from the brand’s creative, out-of-the-box strategies

Ask yourself: what are the steps you can take to manage your product delivery better? Are there small changes you can implement to make customer communication fun, personal and playful?

Address your customers’ payment needs

Failing to provide your customers with their preferred payment option is a costly mistake for e-commerce merchants, given that 67% of UK consumers have abandoned an online shopping transaction due to the payment process. With the growth of m-commerce, business owners need to look into integrating mobile payment methods that offer security and convenience, such as carrier billing.

With two-factor authentication and no required pre-registration, carrier billing is an option that offers security, speed and ease-of-use for your customers. 

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