How COVID-19 Is Fueling Ecommerce Growth in the UK

COVID-19 has been difficult for the UK economy, but one sector of retail sales is actually thriving: ecommerce. Since brick-and-mortar shops have been forced to close their doors and people have been encouraged—and in some cases required—to remain home, the online market has become a place of refuge. But just how much is COVID-19 fuelling ecommerce growth in the UK?

Online Sales Are Surging in the UK

Data from the Office for National Statistics reveals that online sales started to surge in late March. As you may recall, it was March 23rd when Prime Minister Boris Johnson established the first lockdown measures.

By May, online sales in the UK accounted for 32.8% of all retail sales, though the number has steadily declined since then. Still, even as the economy started to reopen in early June, internet sales remained high. Online sales accounted for 28.1% of total retail sales in July—nearly 7% higher than the best ecommerce sales month in 2019. It is now anticipated that the ecommerce market will add about £5.3 billion to the UK economy in 2020.

More Than 7 in 10 UK Businesses Have Changed Their Business Models

As more of the business is moving online, more UK enterprises are adjusting their business model accordingly. According to research from New Royal Mail, 71% of British firms admit to having changed their business model in response to COVID. The trend is seen across all industries and among companies of all sizes.

• 41% of businesses are offering more products and services online
• 39% of businesses are offering more online customer service options
• 31% of businesses are introducing or expanding delivery options

More than half of the businesses who have adjusted their business model intend to keep the changes in effect after the pandemic is over. Over a quarter of the businesses surveyed said the changes would likely be permanent.

Many Consumers Are Driven By Fear of In-Person Shopping

The reason for the shift is fairly obvious. A survey by Wunderman Thompson Commerce reveals that 62% of UK shoppers feel less positive about shopping in person and 48% are fearful of shopping in person.

Perhaps in response to this apprehension, consumers are also getting more patient when it comes to deliveries. Prior to COVID-19, 90% of UK consumers expected packages to arrive within one week, 36% expected arrival in 3 to 5 days, and 29% expected arrival in 2 days or less. After the pandemic, only 71% expected arrival within a week, 29% expected arrival in 3 to 5 days, and 14% expected arrival in 2 days or less—this according to a sample of 2,000 people conducted by PFS.

New Start-Ups Are Surging

New online businesses are taking shape at an unprecedented pace. Consider that 176,000 new start-ups were recorded just between April and June, the highest number for any second quarter in history.

The ecommerce sector alone is responsible for nearly 16,000 start-ups formed between March and July. That’s more than double the number of ecommerce businesses established in all of 2019.

Amazon Is Growing By Leaps & Bounds in the UK

Despite the rise of small and independent ecommerce businesses, Amazon remains the leader in the UK and internationally. Research indicates that Amazon was responsible for 35% of all online sales during the lockdown. In addition, 20% of those surveyed said that they intend to continue shopping with Amazon when the pandemic is over. Buyers identified price, availability, and free delivery as the major factors influencing their buying decision.

While this might sound like bad news for small ecommerce businesses, it can present an opportunity. A growing number of ecommerce retailers are using Amazon to expand their visibility and generate additional sales.

Younger Consumers Are Driving the COVID Ecommerce Boom in the UK

Younger consumers are responsible for much of the ecommerce growth because the online marketplace allows for a range of alternative payment methods. There exists a wide demographic of young buyers who either can’t access a credit or debit card or who prefer to use an e-wallet or other non-traditional payment method. For instance, many young people are choosing buy-now-pay-later schemes like Klarna.

Only 19% of UK consumers overall are comfortable using alternative payment methods, but 42% of millennials and 35% of Gen-Zers favour them—this according to a recent survey of UK consumers by PPRO. As a result, many businesses are introducing more alternative payment methods to attract this growing demographic. If you manage an ecommerce business, it’s becoming increasingly important to choose a merchant services provider that supports alternative payment methods.

Consumers Are Using Mobile Apps to Connect With UK Ecommerce Businesses During COVID

Analytics from AppsFlyer reveal a surge in ecommerce mobile app downloads during late March and April of 2020, when the lockdown was in effect. During this time, the European market saw a 35% spike in downloads, which is 12% higher than the 2019 holiday peak.

Consumer behaviour also spiked during the first peak of the pandemic. For instance, in-app sessions rose by 25% across the continent and 33% in the UK. Between May and June, there was an 11% increase in the number of buyers in the UK compared to the Q4 2019 holiday rush.

Consumers Are Remaining Loyal to Brands Discovered During COVID-19

One encouraging bit of news for up-and-coming brands is that the COVID-19 ecommerce surge seems to be correlating with brand loyalty. Research from Bazaarvoice found that 88% of consumers worldwide plan to continue buying from brands discovered during the pandemic. In addition, nearly 40% of those surveyed confirmed that they did in fact purchase from a new online brand during the pandemic.

This is good news for ecommerce stores, as additional research has found that retention is now viewed as more important than conversion and acquisition in the US and UK. Establishing a loyal customer is far more valuable long-term than simply making a sale.

Ecommerce Data Breaches Are on the Rise in the UK and Worldwide

Of course, every positive trend has its downside. Just as ecommerce is booming, so are ecommerce data breaches. Research from Hiscox indicates that a small business in the UK is hacked every 19 seconds. Every day, around 65,000 small- to medium-sized businesses (SMBs) are targeted in the UK, and about 4,500 of those attempts are successful.

If you run an ecommerce business, you have to be diligent about protecting your—and your customers’—data. Keep your website PCI-compliant, ensure that your payment processor has fraud detection tools available, and audit your web security on a regular basis. Your payment gateway must also be encrypted and PCI-compliant.

How to Benefit From the COVID-19 Ecommerce Boom

Now is the time to ensure that your business is positioned to reap the rewards of this growing trend:

• Make online sales available, even if you run a traditional brick-and-mortar store.
• Make your website attractive and user-friendly. It may be time for an upgrade.
• Consider developing a mobile app for your website.
• Offer as many payment options and currencies as possible, including alternative payment methods.
• Offer exemplary customer service to facilitate brand loyalty. If you can offer live chat, phone service, and email, do it.
• Ensure that your website is secure: firewalls, antivirus protection, secure passwords, a strong SSL certificate, and a PCI-compliant gateway with fraud detection tools–just to get you started.

The most important thing is to think long-term. While COVID-19 may soon be a thing of the past, the economic shift toward ecommerce is here to stay.