eCommerce has become the largest retail market universally, and the UK ranks as the third largest eCommerce market globally, following China and the US.
The sheer scale of the eCommerce market in the UK offers a glimpse into consumer behaviour and emerging trends in digital shopping. It’s about more than just the size of the market but understanding the shift in how people shop and what they value.
But what makes the UK market truly interesting is its internet usage. A staggering 96.7% of the UK population is online, outpacing the European average of 93.8% and the global average of 87.8%. This high internet habit is a driving force in the growth of the UK’s eCommerce sector.
So, how does this high internet usage impact the eCommerce experience? From how people discover products to how they make purchasing decisions, internet access is reshaping the retail landscape.
Here are some notable insights from the UK’s evolving online retail landscape:
- A significant shift towards online shopping in the UK, with 41% of consumers preferring digital storefronts over physical stores.
- The COVID-19 pandemic accelerated online retail sales growth, but physical stores saw a resurgence in popularity post-pandemic.
- Non-store retailers account for 89.3% of online retail sales, indicating a significant shift in consumer shopping habits and retail strategies.
- Fashion was the largest sector in the UK eCommerce market in 2023.
- There has been a rise in mobile device usage for shopping, with 75% of retail traffic and 70% of online orders made through mobile devices.
- WooCommerce and Shopify were the most used ecommerce platforms in 2023.
- A growing preference for diverse online payment methods, with debit cards and digital wallets like PayPal and Apple Pay being popular among UK consumers.
Internet Retail Sales
The UK’s retail market shows a significant tilt towards online shopping. This trend reflects changing consumer preferences and the growing appeal of digital storefronts.
It cannot be understated that the strength of online sales for UK consumers has steadily increased since 2020, with 41% of UK consumers preferring online shopping and 57% believing they will find a better deal online. These figures indicate a shift in where consumers place their trust when spending their money.
Find more statistics at Statista
The journey of online retail sales over the past few years has been quite a story. In the pre-pandemic era of 2018 and 2019, online sales were cruising steadily, showing consistent growth. Then, 2020 turned the tables with the COVID-19 pandemic and the ensuing stay-at-home orders. This situation triggered an unexpected surge in online shopping as people turned to digital stores for their needs.
However, in July 2021, with the lifting of social distancing restrictions in the UK, there was a noticeable drop in online sales. The allure of physical stores and the joy of in-person shopping made a strong comeback.
The figures for April 2022 were influenced by external factors – the EU’s international trade sanctions and export-import bans from March 2022. These political and economic shifts contributed to a significant fall in retail sales. But the market’s resilience showed through, as there’s been a steady climb back up in online sales through 2023, reaching heights unseen since April 2021.
This trajectory tells us about the adaptability of the retail market. External factors like health crises and international policies can have a substantial impact. Still, the market’s ability to recover and grow reflects the evolving consumer behaviour and the agility of the online retail platform.
Brick-and-Mortar Stores vs Ecommerce Stores
In November 2023, a trend emerged within the realm of online retail. Out of all ecommerce sales, which made up nearly 27% of total retail sales, there was a distinct distribution across various stores.
89.3% of online retail sales were made to non-store retailers, meaning businesses that run purely through eCommerce without a physical store. It highlights a shift in consumer shopping habits and the retail landscape:
- Consumer Preference for Online Shopping: This high percentage suggests that consumers are increasingly turning to online shopping as their primary method of purchasing goods. The convenience of shopping from anywhere at any time and a wide variety of online options drive this preference.
- Growth of Pure Ecommerce Businesses: The dominance of non-store retailers indicates that businesses operating solely online are not just surviving but thriving. These businesses don’t have the overhead costs associated with physical stores, allowing them to offer competitive pricing and a wider range of products often.
- Changing Retail Strategies: This trend also reflects a shift in retail strategies. Traditional brick-and-mortar stores might need to rethink their business models to compete with online-only retailers. Some may need to enhance their online presence or consider transitioning to a hybrid model that combines physical and digital retail.
- Technology and Logistics Advancements: The success of non-store retailers showcases the advancements in ecommerce technology and logistics. Efficient online platforms, secure payment gateways, and reliable fulfilment and delivery services are essential components supporting online retail growth.
- Niche Markets and Personalisation: Non-store retailers often have the flexibility to cater to niche markets, offering specialised products like subscription boxes and personalised gifts that might not be possible in a traditional retail setting.
Fashion is the largest market in eCommerce sales and accounted for 28.7% of the UK eCommerce revenue in 2023. The fashion sector’s dominance in the online marketplace is unmistakable. This could be down to the wide variety of choices, the influence of social media on fashion trends, and the convenience of trying clothes at home.
It is followed by Electronics at 16.8%. The demand in this sector is likely driven by the constant evolution of technology and the need for the latest gadgets.
Hobby and Leisure items, including sports equipment, books, and hobby supplies, make up 15.9%. This is likely fueled by people seeking hobbies and entertainment that can be enjoyed at home.
Grocery shopping online has also taken a firm hold, accounting for 12.3% of the revenue. This reflects a shift in consumer behaviour, with 55% of the population opting for the convenience of having groceries delivered to their doorstep. This could be due to the rise in food subscription boxes, with 26% of UK shoppers signing up for a food or drink subscription service.
Shipping and Returns
Around 43.5% of customers say quick delivery is a factor they look for when buying products online, making next-day delivery options more important now than ever.
The competition for delivery services is high, mainly due to more online retailers offering Click and Collect delivery methods. Even as high street stores grapple with the rising trend of online shopping, there’s an interesting twist in consumer behaviour that brick-and-mortar shops should note. People still strongly prefer a blend of online and in-store experiences.
According to a survey by Statista, 45% of UK participants like to pick up items they bought online in-store. This method, known as Buy Online, Pick-up in Store (BOPIS), became more popular during the pandemic, and its convenience will likely keep it popular. This trend suggests that physical stores need to prioritise their eCommerce operations just as much as their in-store services.
According to RetailX Consumer Observatory research, customers are more likely to return an item purchased online compared to one bought in a store, with 47.6% of those asked stating that easy returns are essential when deciding whether to buy something online. For eCommerce business owners, one aspect of customer satisfaction they should consider is returns management and how this will affect first-time customers and repeat business.
Ecommerce Platforms & Marketplaces
Ecommerce businesses have various options available to sell their products online. Most growing companies in the UK use a combination of their own website and marketplaces like Amazon and eBay to reach their customers, but which ones were most popular in 2023?
With the expansion of the UK eCommerce market, product-based businesses are using eCommerce platforms to assist them with their online sales and operations. Offering a variety of features, from stock management and customer communications to advanced features like point-of-sale tools and custom product builders, the right platform makes a world of difference to your online store operations.
As of June 2023, WordPress websites running the WooCommerce plugin were the most used popular solution for eCommerce websites in the UK, making up 22% of our online stores. This was closely followed by Shopify, which also made up 22%. However, WordPress has more sites (200,000) than Shopify (186,000). The two sites are consistently the top 2 in the UK but overtake each other regularly throughout the year.
Other popular eCommerce platforms include Squarespace (17%) and Wix (15%).
In 2023, the top 5 online marketplaces (based on monthly views) were:
Amazon continues to be the leading marketplace in the UK, with 328.1 million views per month, and globally, close to 2 million small and medium businesses are selling on Amazon. In 2023, about 70% of them are third-party (3P) or independent sellers.
Online Payment Methods
UK Finance reported that a third of UK adults used digital wallets like Google Pay and Apple Pay, with over half of 16-24-year-olds registered to use these mobile payments.
This study reveals intriguing trends in UK’s payment preferences for online transactions. Debit cards are the reigning choice, used by 75% of people. This high usage rate indicates a strong trust and comfort level with traditional banking methods in the digital space.
PayPal, trailing slightly behind, is used by 70% of respondents. Its popularity emphasises the growing consumer preference for secure and convenient digital wallets. PayPal’s user-friendly interface and robust security measures likely contribute to its widespread usage.
Interestingly, Apple Pay’s 29% usage rate in the UK, the highest in Europe, highlights a regional preference for flexible and easily accessible tech-integrated payment solutions. This also reflects the increasing adoption of mobile payment technologies in daily transactions.
These insights suggest a diverse and evolving online payment landscape in the UK. Businesses aiming to cater to the UK market should consider integrating multiple payment options, especially those that align with these popular preferences, enhancing customer satisfaction and convenience.
Devices Used by Online Shoppers
More of us were shopping on our mobile devices than computers in 2023, with a whopping 75% of retail traffic now coming from mobile devices. These handheld gadgets are not just browsing tools; they’re also used for making 70% of online shopping orders. The ongoing rise in mobile shopping is likely driven by easy access to social networking and mobile internet. Plus, there’s a shift in marketing techniques. Think about how social media marketing and online-only order discounts make shopping more tempting with just a few taps on our screens.
While 75% of retail traffic comes from mobile devices, in the second quarter of 2023, 48% of UK online shoppers preferred to make purchases using their phones. This contrast is quite telling.
Computers, including laptops and desktops, were still the preferred shopping tool for 40% of consumers despite the lower traffic they attract compared to mobile devices. Tablets lag, favoured by just 13%.
When shopping for goods online, it is common for consumers to pull out of a transaction, leaving the order incomplete. In the second quarter of 2023, approximately 85 % of UK mobile device orders were not completed. Over seven in ten carts created were also left abandoned on computers during that same three-month period.
Why this gap? While mobile devices are great for browsing and gathering ideas, they might not be as convenient or trustworthy for purchasing. This could be due to several factors:
- Website Optimisation: Many websites might not be fully optimised for mobile shopping and lack mobile-friendliness. Navigation can be trickier on a smaller screen, and some sites might not display correctly, leading to a less satisfying shopping experience.
- Payments: Mobile shoppers might face hurdles during the payment process. In-app browsers can make it difficult to use Apple Pay or other streamlined mobile payment systems, pushing users to switch to a computer where the process feels more secure and straightforward.
- Security: Some shoppers might still feel that computers offer a more secure environment for entering payment details despite advancements in mobile security.
- Comfort and Habit: Many consumers are used to shopping on a larger screen and might find detailed product reviews and comparisons easier on a computer.
By addressing these areas, businesses can potentially convert more of that mobile browsing into actual sales.
What does the future hold for ecommerce?
Looking ahead to 2024, it’s evident that success belongs to those who adopt speed, flexibility, and innovation. These are important for expanding businesses, crafting exceptional customer experiences, and making the most of the rapid transformation in the sector. Contact Delta Fulfilment today to see how we can help you and your ecommerce business achieve your 2024 business goals.