The COVID-19 pandemic saw a dramatic growth in eCommerce businesses, sales and the sector as a whole in the UK.
But was this growth part of a wider trend? What’s in store for both online and brick-and-mortar businesses in the future? And what can you do to make your eCommerce business a success in 2022 and beyond?
Growth of eCommerce business and sales
In a recent introductory paper to taxation within the eCommerce industry, the Treasury wrote:
“In some respects, the pandemic brought into greater focus longer-term trends affecting the retail sector.”
Evidence would suggest this is true, as online shopping accounted for around 3% of all retail sales in 2006 and around 22% in March 2020.
Innovative new business models, the rapid pace of technological change and the ways consumers shop has all changed.
During the worst of the pandemic, the online retail industry exploded in November 2020 to reach a record high of around 37.2% of all retail sales, according to the Office for National Statistics (ONS).
According to its latest data, online sales in January 2022 accounted for 27.1% of all retail sales, compared to 20.2% in January 2020.
The future for eCommerce businesses
There isn’t much reason to believe that the growth and importance of eCommerce business is about to wain – or slow, for that matter.
According to Edge by Ascential, an organisation that develops and supports the digital services of brands, UK shoppers will continue to shift online in droves, with 38% of UK retail sales taking place online by 2026.
Unfortunately, not many other forecasters have delved into the topic like Edge by Ascential to allow us to scrutinise their figures, including the Centre for Retail Research (CRR).
But, the CRR did warn of a drop in online sales in 2022 and the immediate years following the pandemic, because people who missed out on a lot of physical shopping continue to enjoy the new-found novelty of it.
“It may take a year or two before the online share returns to 2021 levels”, the Centre said.
However, one indication that the eCommerce sector is now large enough to seriously rival physical retailers and will remain that way for the future is the Treasury’s proposed plan to introduce an online sales tax.
The rationale behind this, it says, is to make the tax system fairer between online businesses and brick-and-mortar retailers, who overwhelmingly pay the majority of business rates.
The tax is in its consultation phase, to which all stakeholders of the eCommerce industry can submit answers and recommendations.
Accounting for eCommerce businesses
Just because the eCommerce sector has enjoyed a period of unprecedented growth in the UK, it doesn’t mean you can rest.
As the CRR warns, the next few years could be tough for some as highstreets see a resurgence.
Furthermore, competition within your sector is higher than ever. You need an edge that we, as eCommerce accountants, can offer.
Whether you need help with your accounts or tax returns, drop shipping advice or just someone to bounce ideas off, we’ve got you covered.
Talk to us today about your online retail business.