How to start an Ecommerce business in the UK: A step-by-step guide

Did you know that the UK ecommerce market is expected to surpass £200 billion by 2025? That’s just one statistic from a range of impressive data that indicates a golden opportunity for savvy ecommerce entrepreneurs is about to arrive.

Other impressive current and forecasted stats about the ecommerce market include:

• 36.3% of the UK’s the total retail market now consists of ecommerce 
• Worldwide ecommerce sales will reach $6 trillion this year (2024)
• 20.1% of all retail sales will be digital transactions
• The UK is the third-largest ecommerce market in the world

With online shopping becoming an integral part of everyday life, there's never been a better time to start your own UK ecommerce business. This could indeed be your best chance to launch your online business dream. 

Pounds and potholes on the ecommerce path

However, although these boom signals might light up pound signs in your eyes, be aware that the path to online riches is dotted with digital potholes. And you’ll need a solid ecommerce business roadmap to stay clear of these hazards. 

These challenges include high upfront costs, intense competition, logistical complications, limited technical expertise, difficulty building a customer base, overcoming regulatory hurdles and staying ahead of trends. 

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Crunch will show you the easy route

Actually, there is no ‘’easy route’’, but fortunately we can direct you towards the right checkpoints and help you prepare properly for a smooth journey.

At Crunch, we’ve helped thousands of people launch ecommerce businesses over the years, and we’ve got mountains of real-life practical advice we can share with you.

So if you are tired of working for someone else and ready to jump into the driving seat of your income, let's build an online empire together. 

Make sure you come to us for ecommerce accounting, so we can help you on your way to making your first £billion. Check out the steps below to learn how to get your digital merchant machine started.
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Easy steps to starting your Ecommerce business

‍1. Understanding the nature of Ecommerce in the UK

Before you’re ready to start the physical/digital process of building your ecommerce business, it’s important to gain a decent base knowledge about the industry and its core aspects. Let’s take an overview:

Overview of the UK’s Ecommerce market

The UK ecommerce market has experienced significant growth in recent years, driven by increasing internet penetration, mobile commerce, and changing consumer behaviour. Some key trends include:

• Rapid growth - The UK ecommerce market has consistently outpaced the overall retail market, indicating strong consumer demand for online shopping.
• Mobile commerce - Smartphones have become the primary device for online shopping, making it essential for businesses to optimise their websites and apps for mobile users.
• Shift towards online grocery shopping - The COVID-19 pandemic accelerated the adoption of online grocery shopping, creating new opportunities for ecommerce businesses.
• Rise of marketplaces - Online marketplaces like Amazon and eBay have become dominant players in the UK ecommerce market, offering a wide range of products and services.

Ecommerce customer preferences:

Ecommerce consumers have some distinct preferences when it comes to online shopping, and it pays to know about them:

• Convenience - Consumers value the convenience of online shopping, particularly for items that are difficult or time-consuming to purchase in-store.
• Price comparison - UK consumers are very price-conscious and often compare prices across different online retailers.
• Fast and free delivery - Consumers expect quick and efficient delivery, with free shipping being a significant factor in purchase decisions.
• Return policies - Generous return policies are essential for building customer trust and satisfaction.
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2. Finding your niche

After you’ve got a grasp of how the ecommerce industry works, it’s time to begin the groundwork of setting up your business by finding a niche. Here’s the what’s involved: 

Market research - How to identify profitable niches

The first, and arguably most important, step to starting a thriving ecommerce businesses is to choose a niche that is profitable, and it requires a few key actions:

• Consider your passions and interests - Building a business around something you love can make the journey more enjoyable and sustainable.
• Leverage your expertise - If you have specialised knowledge or skills, consider building a business around them.
• Research reports - Organisations like Statista and eMarketer can provide valuable insights and industry data.
• Conduct keyword research - Use tools like Google Keyword Planner or SEMrush to identify popular search terms related to your potential niche.
• Engage with potential customers - Join online forums/communities and monitor social media conversations to understand consumer sentiment.
• Analyse industry trends - Track search terms with Google Trends to stay updated on the emerging markets to spot potential opportunities. To help you find where they may lie, see the chart below:

(The percentages represent each niche’s share of the total profits of all of the most profitable ecommerce niches combined.)

Analysing competitors: methods to evaluate competition in the UK market

Understanding your competition is absolutely essential for developing a successful business strategy. Here's how to evaluate your competitors:

• Identify key competitors - Determine and list the major players in your niche.
• Analyse their product offerings - Assess the quality, pricing, and features of their products.
• Evaluate their marketing strategies - Examine their marketing channels, messaging, and branding.
• Assess their customer reviews and ratings - Understand customer satisfaction and identify areas for improvement.

How to differentiate your brand

To stand out in a competitive market, you need to differentiate your brand. Here are some strategies:

• Unique selling proposition (USP) - Identify what makes your business unique and communicate it clearly to your target audience.
• Strong branding - Develop a memorable brand identity, including a logo, tagline, and consistent messaging.
• Excellent customer service - Provide exceptional customer experiences to build loyalty and positive word-of-mouth.
• High-quality products or services - Offer products or services that exceed customer expectations.
• Plan a marketing strategy that incorporates and communicates the above points.

Validating your business idea: techniques to validate product ideas

Before investing heavily in your business, it's important to validate your product idea. Here are some techniques to do so:

• Customer surveys - Gather feedback from potential customers to understand their needs and preferences.
• Minimum viable product (MVP) - Create a basic version of your product to test its viability and gather feedback.
• Pre-orders - Gauge customer interest by offering pre-orders for your product.
• Focus groups - Conduct focus groups to get in-depth feedback from potential customers.
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3. Building your website and marketplace profiles

Once you’ve decided what products you want to sell and how you are going to sell them you need a shop to do it from - this is your website and marketplaces. Let’s find out how to set them up for trade: 

Building your website

Every successful ecommerce business has a well-designed website. Here are the key elements to consider:

• User-friendly interface - Ensure your website is easy to navigate and provides a seamless shopping experience.
• Mobile optimisation - Design your website to be responsive and look great on all devices.
• Product pages - Create informative and visually appealing product pages with high-quality images and detailed descriptions.
• Checkout process - Make the checkout process as simple and efficient as possible to minimise cart abandonment.
• Secure payment gateway - Use a reputable payment gateway to protect customer data and ensure secure transactions.

Optimising for SEO

Search Engine Optimisation (SEO) drives organic traffic to your website. Here are some tips for optimising your eCommerce site:

• Keyword research - Identify relevant keywords and incorporate them naturally into your website content.
• On-page optimisation - Optimise your website's title tags, meta descriptions, header tags, and image alt text.
• Content creation - Publish high-quality, informative content, such as blog posts and product guides.
• Backlinks - Build high-quality backlinks from other reputable websites to improve your website's authority.

Creating marketplace profiles

If you plan to sell your products on online marketplaces like Amazon, eBay, or Etsy, you'll need to create profiles for your business. These profiles should be optimised to attract buyers and increase sales.

• Complete profile information - Fill out all relevant fields with accurate and detailed information.
• High-quality images - Use professional-quality images to showcase your products.
• Positive seller ratings - Maintain a positive seller rating by providing excellent customer service and timely shipping.
• Optimise listings - Use relevant keywords and compelling descriptions to optimise your listings for search.

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4. Registering your business in the UK

After you have gone through the previous 3 steps, it’s time to make it official. There’s just one last thing to do before you’re ready to go live:

Legal structure

When starting an eCommerce business in the UK the most common options for legal structures include:

• Sole Trader - A simple structure where the business owner is personally liable for all debts and losses. Suitable for small, low-risk businesses.
• Limited Company - A separate legal entity that shields the owners from personal liability. Ideal for larger businesses or those with higher risk levels.
• Partnership - A business owned by two or more people. Similar to a sole trader in terms of liability.

The choice of legal structure depends on factors such as the size of your business, your risk tolerance, and your future plans. Overall though sole tradership is by far the best structure for an ecommerce business, due to its simplicity. 

For more info on various legal structures check out our detailed guide here.

Registering with HMRC

Once you've decided on a legal structure, you'll need to register with HMRC. The steps involved are as follows: 

1. Choose a business name 

2. Ensure your chosen name is unique and doesn't conflict with existing businesses. 3. Register for Corporation Tax (if applicable) 

4. Register for VAT (if applicable) Register for PAYE (if applicable) 

5. Register for National Insurance 

For a full explanation on how to register we’d recommend reading our step-by-step guide. 
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Your Ecommerce adventure awaits

Launching an ecommerce business in the UK can be a personally and financially rewarding venture, but it requires proper research and planning. 

Taking time to understand the UK ecommerce landscape, find a profitable niche, building a strong online presence, and complying with the legal and regulatory requirements, will increase your chances of success.

With the right strategy, dedication, and support, you can lay the foundations for a thriving online business and achieve your entrepreneurial goals.

Need help getting started? Crunch is here to provide expert guidance and support every step of the way. Contact us today to learn more about how we can help you launch your ecommerce business.

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