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With nearly 60 million ecommerce shoppers, there’s no doubt that the UK has a massive ecommerce market. In fact, it’s the largest ecommerce market globally and is expected to garner over $166 million USD in revenue in 2023. Experts predict that the market is only going to grow bigger in the coming years, creating an excellent opportunity for those who want to start their own ecommerce business in the UK.
However, starting an ecommerce business from scratch can feel overwhelming. Coming up with the perfect idea and choosing a profitable niche are only just the beginning. The actual process of turning your idea into reality is daunting, as it involves developing a business model and finding reliable suppliers and business partners.
Fortunately, this post will serve as a 101 guide to help you get your ecommerce business off the ground and find your feet in the UK market. Let’s dive in.
What is an ecommerce business?
An ecommerce business is a business that enables customers to buy products and services over the internet. That means customers don’t have to visit a physical store to find the products they need and, instead, complete the entire shopping journey entirely online. This includes everything from product discovery to research to payment. The products will then be delivered to the customer’s doorstep or to another delivery location chosen by the customer.
Ecommerce businesses are relevant to a wide variety of industries, meaning they’re not just limited to fashion items or electronics. You can buy almost everything online if you happen to find the right ecommerce business. For example, there are businesses that sell large appliances and furniture or even medicines and healthcare products online.
However, in some cases, an ecommerce business may also sell non-physical products and services that will be delivered to the customer through other means. An example of this is if a customer buys a digital game, the link to download the game will be sent to them via email.
Examples of UK-based ecommerce businesses
The UK has no dearth of ecommerce businesses, and it’s not just limited to UK-specific websites for large retailers like Amazon and eBay. Let’s take a look at some examples of UK-based ecommerce businesses so you can get a feel for some of the country’s most successful brands.
As one of the UK’s leading retailers, it’s only natural for Argos to also establish an ecommerce storefront. The Argos website is one example of a UK-based ecommerce business as it enables shoppers to browse and find products across a wide variety of categories and complete their purchases entirely online. The business’s range of product offerings is massive and includes tech, appliances, home, garden, clothing, jewelry, health, and many more.
When speaking of UK-based ecommerce businesses, it’s impossible to ignore the significance of ASOS. Founded in 2000, ASOS was at the forefront of the ecommerce revolution, particularly when it came to clothing and fashion. The business has since expanded to other countries and continents but mostly still deals in fashion products.
The name may make you instantly think of the departmental store chain, but after some financial difficulties and acquisitions, Debenhams is now exclusively an ecommerce store. Shoppers can browse through a vast collection of fashion and clothing items as well as beauty, home, and electronic products.
Early Learning Centre is an ecommerce business that deals exclusively in toys and games to support children in their learning and development. Shoppers can find a wide selection of baby equipment for new parents. Moreover, their collection of toys is categorized by age, type, and learning skill.
5. Pets at Home
One of the largest pet supplies retailer, Pets at Home has hundreds of stores across the UK. They also have an ecommerce website so pet owners can find all the supplies, food, accessories, and toys they need for their pets. This ecommerce business caters to the supply needs of a wide variety of pets including fish, reptiles, birds, and wildlife.
Superdrug is an ecommerce business that deals in fragrance, skincare, and makeup products. The website offers a large selection of products from leading brands along with Superdrug’s own brands. This ecommerce business goes a step further by offering a health services hub, which allows customers to get online doctors consultations and schedule clinic appointments.
Waitrose and Partners is a leading grocery store chain based in the UK. The brand has since opened an ecommerce store where shoppers can find quality groceries and find delicious recipes to try at home. In addition, the store serves as a resource for a vast selection of wines and spirits and even allows shoppers to buy flowers and gardening supplies.
Like its hundreds of stores across the UK, the ecommerce storefront for WHSmith offers books, stationery, toys, games, and other entertainment products. Shoppers can browse their website to find what they need based on a range of categories and brands. They can even arrange to collect their online orders from one of the hundreds of physical stores in the UK.
How to start an ecommerce business in the UK
Now you’re ready to get to the more practical aspect of starting an ecommerce business. Let’s take a look at the step-by-step process to start an ecommerce business in the UK.
Step 1: Research ecommerce ideas
First things first, you need an idea. And not just any idea will do; you need an idea that’s viable and can be brought to life. Moreover, it must be unique enough so you can stand out from the competition. Yet it should still be in demand enough for it to be profitable.
The following questions can help you narrow down some initial ideas for your ecommerce business:
- What products can you sell?
- Is there a demand for the product and will it sell?
- Is the product profitable at all?
- How competitive is the industry?
- How can you add value and stand out from the competition?
- Will it be challenging to source/manufacture the products?
- Will it be challenging to store and fulfil the products?
Based on your answers to the above questions, you should be able to come up with some solid ideas to start your ecommerce business. You can further narrow down your list to finalise products that are profitable and in-demand.
Step 2: Choose a business model
Next, it’s time to figure out which ecommerce business model will support your idea. This decision will form the foundation of your entire ecommerce strategy.
For starters, it will determine how the products or services will be distributed and marketed to your target audience. Some businesses also decide on a business model before they even come up with an idea in the first place.
You typically have the following key business models to choose from:
- Business to consumer (B2C) – This is the most common ecommerce business model, which involves a business selling to individual consumers. Most of the ecommerce businesses we mentioned above also rely on this business model. With a B2C (also known as DTC) business model, you would be required to procure inventory to sell to your customers. Alternatively, you can also use dropshipping solutions instead of acquiring the inventory yourself.
- Business to business (B2B) – In this business model, your company will sell products and services to other businesses. For example, a business that sells SaaS software or a wholesale retailer would be considered B2B. This type of business model is ideal if you want to deal with large order volumes at a time and is particularly appealing to those that manufacture their own products.
- Consumer to consumer (C2C) – In the C2C business model, consumers sell to other consumers and the business serves as an intermediary. For example, platforms like eBay and Etsy can be considered C2C. This model can be particularly appealing for people who don’t want to deal with the hassle of finding suppliers or storing and procuring inventory.
- Consumer to business (C2B) – In this type of business model, individuals offer services to businesses. Take, for instance, freelancing platforms where freelance professionals sell their services to companies that need their expertise.
Depending on the business model that’s best for you, ShipBob offers a variety of B2C and B2B fulfilment solutions to support your distribution strategy. For starters, ShipBob fulfils your B2C customer orders for you and handles everything from inventory storage and management to shipping. Alternatively, you can opt for ShipBob’s retail dropshipping solution, which would allow you to sell your products directly on the websites of leading retailers while ShipBob fulfils those orders for you.
ShipBob can even fulfil your B2B shipments for you so you can optimise your retail distribution strategy. This would involve shipping wholesale orders to your retail partners while complying with all the retailer requirements. That way, you can significantly streamline your ecommerce distribution strategy while saving time and improving efficiency.
Step 3: Solidify your idea
The next step is to start bringing your idea to life. Once you’ve finalised an ecommerce idea and business model, it’s time to solidify it through the following steps.
Naming your company
What do you want to name your business? This should be unique and catchy so it’s instantly recognizable. Ideally, choose something that’s not too similar to an existing ecommerce business name. You need to build a unique brand image and that’s where a unique name comes in.
Additionally, it shouldn’t be too long so as to confuse shoppers. Lengthy business names often don’t work out because people can’t remember them. Or they’ll get shortened at some point to make them easier to remember. So instead of leaving it up to the consumers to decide what your business name should be, start with something catchy that you want to associate with your brand.
You should also consider how the name would look in a website URL. If it’s two or more words, will it be difficult to process when they’re all joined together in your website URL? Think of possible nuances and profanities that could come from the URL before you finalise the name.
Choosing a legal status
Starting an ecommerce business in the UK requires formally registering your business with the relevant authorities. This step would eventually determine who’s in charge of the business and where the profits will go. It also declares to the government who’s responsible for the taxes associated with running a business in the UK.
There are four main options to choose from:
- Sole trader – In this type of venture, you’re solely liable for all the profits and losses associated with your ecommerce business.
- Partnership – With this option, the management and profits will be shared with another individual.
- Limited liability partnership – Here, you still function as a partnership, but the company and its finances are kept separate from your own.
- Limited liability company – In this type of venture, your business functions as a private company, and the assets of the shareholders are protected. Additionally, your liability is also determined by the extent of your investment in the company.
Creating your logo and visual identity
Next, you can start visualizing your idea by developing your brand’s visual identity. This would involve creating a unique logo and deciding on other visual elements to associate with your brand.
- Brand logo – This should be unique and instantly recognizable so people can associate it with your ecommerce business. Try to avoid making it too complicated as this can end up confusing your audience. Carefully choose fonts, colours, and imagery that you’d want to keep associating with your brand in the long term.
- Visual identity – This essentially relates to other visual aspects of your brand in addition to your logo. It can be anything from the colour palettes and typography to other imagery that should be associated with your brand. This visual identity will determine how your brand is visually presented to your audience, particularly when it comes to your website design.
Trademarking and registering
Finally, now that you have a name and a logo in place, you can register this information with the UK government. Additionally, other details about your business such as its legal status, address, and share structure should be registered.
The registration process is fairly quick and simple. It can be completed online on the Gov.uk website for £12, and your business will be registered in as little as 24 hours. Keep in mind that if you don’t want to include “limited” in your business name, registration must be done via post.
Additionally, trademarking your business name is another important step if you want to establish a unique brand identity. This will make you legally entitled to take action if someone uses your brand name without permission. For instance, it would give you leverage over counterfeiters or scammers pretending to be your business.
You can register your trademark on the Gov.uk website and it will cost you at least £170. This may cost more depending on the situation. To avoid any complications, make sure to check if your trademark is available before you send in your application.
Step 4: Survey your shipping options
Now that you’ve decided on what you want to sell and even registered your ecommerce business with the UK authorities, it’s time to figure out how to get your products to the customers. This step is a little more complicated in ecommerce since customers can’t just walk into your store and walk out with the products. With the entire transaction taking place online, it’s up to you to figure out how the products will get to the hands of your customers.
As such, you need to carefully assess your ecommerce shipping options. This is a particularly challenging step since the landscape has become increasingly competitive, with ecommerce giants like Amazon offering cheap and lightning-fast delivery. Here are some of the key shipping options to consider for your ecommerce business besides standard delivery:
- 2-day shipping – This is an expedited shipping method that involves getting products to the customer’s doorstep within two days.
- Overnight shipping – In this shipping method, orders are transported overnight to ensure that they reach customers on the next business day.
- Same-day delivery – This is the fastest method that involves delivering packages on the same day they were ordered.
- International shipping – Of course, if you plan on launching your business globally, you’d also need to consider fast and affordable international shipping options.
- Eco-friendly shipping – Businesses may also consider eco-friendly shipping options if they want to reduce their environmental impact. This is particularly important for eco-friendly brands.
Consider which of the above shipping options you want to provide and then look for reliable shipping carriers to partner with. Ideally, you should be able to work with multiple carriers so you can always choose the best option for each shipment.
Fortunately for ShipBob customers, our partnership with leading regional and international carriers enables you to find the best shipping carrier for each order. The ShipBob platform lets you compare rates and transit times between multiple carriers so you can choose the best option for your shipment. ShipBob even offers affordable 2-day shipping, which allows you to keep up with the competition and quickly get orders to your customer’s doorstep.
Step 5: Research your competitors & look for value gaps
One of the most crucial steps that you can’t afford to miss is competitor research. This is when you research your competitive landscape and dig a little deeper into what your competitors are or aren’t doing. By doing this, you can get a better idea of what you’re up against and how you can set your business apart.
Keep in mind that having some competition is a good thing as it means that you’re entering a profitable market. However, since you’ll be up against more established businesses, you’re going to have a tougher time building your customer base. That said, this could also give you the perfect opportunity to identify any value gaps that you can take advantage of.
Look at what your competitors are doing well and where they can make improvements. What can you do better than them? For example, let’s say they’re only providing two payment options. You could improve on this by providing even more payment options to cater to a variety of customers.
Step 6: Finalize your marketing strategy
Once you have all the details figured out, it’s time to come up with a plan to market your business to the right audience. As mentioned earlier, you’re entering into a market where there are several established businesses. This means you need to be extremely creative and strategic with your marketing decisions.
First think of your target audience and conduct research to understand them better. What are their needs and pain points? What appeals to them and how is it relevant to your business? Where do you reach them and what approaches should you use? Based on the answers to these questions, you can come up with a solid marketing strategy that effectively gets your new ecommerce business in the limelight.
Initially, you may need to invest in some paid advertising and influencer sponsorships to kickstart your marketing. This will enable you to get your ecommerce business in front of people who’ve never heard of your brand before. Then follow up with consistent social media marketing and email marketing campaigns to continue engaging your audience. Consider seeking assistance from a specialized SaaS marketing agency to refine your strategies and maximise the impact of your online presence.
How to choose the right ecommerce platforms
When you own a physical store, you work on your storefront, your display, your layout, and your interiors to ensure a memorable in-store experience. With ecommerce, however, your website serves as the storefront where people get to interact with your business. As such, choosing the right ecommerce platform is crucial to ensure a seamless ecommerce shopping experience.
Consider the following key factors when deciding on an ecommerce platform for your business.
The reputation of the vendor can tell you a lot about their expertise and reliability. Since you’ll largely be relying on the vendor to help you deliver an exceptional ecommerce experience, it’s important that you work with someone reliable. Ideally, they should be highly experienced in your industry, so they’re equipped to handle your unique and complex needs.
When you’re just starting out, your requirements may not be too complex or difficult to meet. But as your business grows, your needs may grow along with the demands of your customers. So it’s crucial that you find a platform that will be able to scale along with your business.
With mobile ecommerce sales expecting to hit the £100 billion mark in 2024, there’s no denying the importance of catering to mobile ecommerce buyers. As such, your ecommerce platform should have the capability to adapt to the device being used–whether people are shopping from their computers, mobiles, or tablets.
In ecommerce, you’ll be processing a lot of sensitive personal and financial information to complete transactions. As such, your ecommerce platform should have the necessary security protocols in place to ensure that your customers’ information is protected at all times.
In addition to the basics, it’s crucial that your ecommerce platform also offers all the essential features that you’re looking for to deliver an exceptional shopping experience. For starters, it should support multiple payment gateways and be able to offer flexible shipping options. Other useful features include the ability to automatically calculate taxes and shipping fees.
Besides these, there may be several other features that you want your ecommerce platform to provide. For instance, you’d want to look for something that offers seamless integration with your existing software so you can ensure that your back-end and front-end processes are synced at all times.
Finally, consider the level of support that the vendor will provide if you encounter a problem. Support should be available 24/7 since you never know when you might experience an issue. Moreover, you should be able to contact support through your preferred channel–whether that’s via phone, email, or chat.
How much does it cost to start an ecommerce business in the UK?
The cost to start an ecommerce business in the UK varies depending on the industry you choose and the size of your venture. But since ecommerce businesses require fewer permits and licenses, they tend to cost significantly less than starting a brick-and-mortar store. Not to mention the additional savings associated with not having to rent retail space. In some cases, you may be able to start an ecommerce business for as little as £2,000.
Keep in mind that there are a number of variables that determine the actual expenses you will incur. Here are a few of the key expenses that will play a role in your subsequent spending:
This includes all the expenses related to setting up your ecommerce business. It may include:
- Business registration fees (£12)
- Domain fees (£7 – £12/year)
- Hosting fees (£2 – £400/month)
- Ecommerce platform fees (£240 – £5,000/year)
- Trademarking fees (£170 onwards)
- SEO (£100 – £4,000/year)
- SSL certificates (£7/year onwards)
- Maintenance fees (£30/month onwards)
Any ecommerce business that generates a taxable turnover of at least £85,000 per year should register for VAT. The UK government will then charge a standard VAT rate of 20% (or lower depending on your product category). After registration, your business will need to ensure compliance with HMRC’s requirements by maintaining accurate records, supplying VAT invoices, and completing VAT returns on time.
Besides VAT, you may also need to pay corporation tax and income tax depending on the legal status of your ecommerce business. If your business employs staff, employers’ PAYE is another important payment you need to make.
Besides the two main expense categories above, ecommerce businesses in the UK will also need to consider a few additional costs. These include:
- Inventory procurement – If you’re dealing with physical products, you’ll need to consider the cost of procuring inventory to sell to your customers.
- Storage and management – For businesses that store and manage their inventory in-house, the cost of renting and maintaining a warehouse should be considered. Other businesses may also opt for dropshipping solutions, which can help save on storage costs.
- Operating costs – You should also consider the cost to operate your ecommerce business as a whole. This goes beyond your warehousing operations but also includes the cost to keep your office open and ensure that you have staff to help you run your business.
- Shipping costs – One major area of expense for ecommerce businesses is shipping. You’ll need to consider the cost of delivering goods to your customers.
- Marketing expenses – Additionally, you’ll also spend a bit on marketing your business. This is particularly crucial during the early stages of your business since you’re just starting to build your customer base.
5 tips for running a successful online ecommerce platform
While knowing the basics can help you get started, running a successful ecommerce business is easier said than done. So follow these tips and best practices to give you leverage and establish a successful ecommerce business in the UK.
1. Simplify the customer journey
Ecommerce success relies heavily on the customer experience. You want your customers to enjoy interacting with your business and be able to complete their purchases seamlessly. This makes it crucial to simplify the customer journey as much as possible so customers can easily find what they need and complete their purchases with minimal hassle. Minimise distractions and cut out unnecessary steps in the checkout process such as the need to create an account to make a purchase.
2. Use high-quality visuals to sell your products
Ecommerce shoppers rely mostly on product descriptions and photos to finalise their purchase. Make it easy for them to assess the quality of your products with high-quality visuals that showcase the tiniest details. Consider including 360-degree visuals and videos to help your customers better understand what your product looks like.
3. Rely on premium hosting
Speed is another factor that influences your customer experience and may even play an important role in converting shoppers. Moreover, you want to avoid glitches and crashes as much as possible. This is why it’s crucial to invest in a premium hosting service so your customers can enjoy a seamless browsing experience when shopping on your site.
4. Give your customers options
Another way to improve the ecommerce shopping experience is by giving your customers the freedom to make choices. This goes beyond your product selection and also extends to other aspects such as payment and shipping. Make sure there are multiple payment options for your customers to choose from.
Additionally, don’t just limit them to free standard shipping. Some customers may prefer to get their orders faster even if it means paying just a little bit extra.
5. Use social proof to gain trust
Trust is the key factor that determines whether people buy from your business. As such, you need to look for ways to instantly win the trust of shoppers even if they’ve never heard of your business before. One of the most effective ways to do this is by displaying reviews and customer photos so they can see how much other customers are enjoying your products. These serve as an authentic and unbiased source of information for the quality of your products and services.
Never run out of ecommerce steam with ShipBob
Getting your ecommerce business off the ground is only just the beginning. The ultimate challenge lies in staying on top of your operations and fulfilment activities so you can maintain a successful business in the long run. In many cases, this may even involve offloading some of your fulfilment management activities to a 3PL like ShipBob. This would give you the flexibility to focus on growth initiatives so you can exponentially scale your business.
ShipBob offers a host of ecommerce solutions to simplify your fulfilment and inventory management. When you outsource to ShipBob, you get to take advantage of our distributed fulfilment network to store your inventory. That way, you don’t have to worry about renting your own warehouse space or managing complex warehousing operations.
This distributed fulfilment network spans international borders, which significantly makes it easier to handle international fulfilment. You get to store your inventory closer to the customers and ensure speedy and affordable international deliveries.
Moreover, ShipBob’s proprietary software allows for optimised inventory automation and warehouse management. It syncs with your online store and automatically processes orders as soon as they’re placed on your website. That way, the fulfilment process automatically gets kickstarted without you having to lift a finger.
The software also keeps track of your inventory in real time so you can get the most updated information on inventory levels and movement. This makes it easy to get accurate predictions on when you need to reorder inventory and how much stock you’ll need in the future. So you can always maintain optimal inventory levels without overspending on excess stock and storage costs.
Get started with ShipBob
Ready to fulfil your orders using a global omnifulfilment platform? Connect with our team to get started with ShipBob today.
Starting an ecommerce business FAQs
Below are answers to the top questions about starting an ecommerce business in the UK.
How much does it cost to start an ecommerce business UK?
Depending on the type and scale of your operations, you can start an ecommerce business in the UK for as little as £2,000.
Do I need to register my ecommerce business UK?
Yes, you need to register your UK-based ecommerce business with the HMRC.
What is the best ecommerce platform to start an ecommerce business UK?
Shopify, BigCommerce, and Squarespace are some of the leading ecommerce platforms to consider using.
How can ShipBob help me start an ecommerce business in the UK?
ShipBob helps you with some of the most complex aspects of starting an ecommerce business in the UK. If you don’t want to take on order fulfilment and shipping, ShipBob can help you. We even have a Growth Plan for startups and brands doing a small volume of orders.