How e-commerce is changing the face of traditional commerce in the UK

With the world inching towards pre-pandemic normalcy, businesses everywhere face unfamiliar obstacles and have to think outside the box. As a result, many entrepreneurs have had to rework old strategies and introduce processes to stay on top of their game.

The e-commerce industry, in particular, has been a beneficiary of the Covid-19 era. The sudden movement restrictions due to lockdowns at the peak of the pandemic era forced firms and consumers alike to find convenient ways of getting goods without leaving their homes. This gave rise to a newfound reliance on online shopping platforms as an ideal solution. Now customers can easily browse their favourite products and services through clicks from mobile phones and PCs.

In addition, the e-commerce industry has been instrumental in a time of great disruption, helping individuals survive the pandemic and encouraging businesses to stay on top of online trends.

As we put the Covid-19 dynamics behind us , it's clear that electronic marketing is an innovative path forward for industries across the globe. It is important in today's society to explore how e-commerce is changing traditional commerce in terms of consumer behaviour and market trends, which helps us get an insight into where the future of retail lies.

How it all began

In 1979, a 30-year-old man from Southern England, Micheal Aldrich, connected a modified television set to a real-time transaction processing computer through a telephone line. This enabled a closed information system to be shared and ensured a secure data transmission. Aldrich's ingenious work was the beginning of online shopping, also known as e-commerce.

According to Shopify, the first legitimate transaction occurred when Dan Kohn sold a CD of Sting's "Ten Summoner's Tales" to a friend in Philadelphia in August 1994.

Fast forward to today, it has become a multi-billion dollar industry revolutionising how we buy things. With endless possibilities one click away, companies like Amazon and Ali Baba are leading the e-commerce pack globally.

The UK e-commerce industry thrives because people continually search online for the best prices and deals. As a result, online shopping is more dominant in the UK than in other countries worldwide.

According to the International Trade Administration, "consumer e-commerce now accounts for 30% of the aggregate UK retail market - up from 20% in 2020 - with the annual revenue of e-commerce, totalling over £16 billion."

The International Trade Administration stated that in 2021, not less than 82% of the UK population purchased, as a minimum, one product online, with the UK having approximately 60 million e-commerce users - leaving a minority of the population as non-digital buyers.

Prominent UK e-commerce companies & their revenues

E-commerce companies continue pushing modern consumerism's boundaries with creative, tech-enabled measures. From virtual product trials and augmented reality design simulations, these online business ventures are goading customers into unprecedented demand.

The UK's e-commerce market is an increasingly lucrative scene that has seen immense growth. From dominating players to small start-ups, countless businesses in this digitally driven landscape produce products and services of all kinds. The companies' efforts have led both to their own successes and a notable boost for the overall economy.

One of these companies is Amazon, the largest e-commerce platform in the world in revenue generation. What started as an online bookstore quickly became a one-stop shop for everyday needs and luxuries. Amazon is one of the most popular logistics services in the UK.

Statista revealed that Amazon is topping the UK e-commerce market, with net sales of £13.8 billion in 2021 generated in the UK. Apart from adding to the economy's growth, it also provides employment opportunities. It has delivered about 27,500 jobs in the country. A shipping company, Clickpost, predicted the company to reach £62 billion in revenue in 2025.

Following Amazon is Tesco, with £6.2 billion. Then Sainsburys with revenues of £6.3 billion. Argos is the fourth biggest online store in the UK, with net sales of £4.2 billion in 2021.

eBay is another e-commerce company in the UK that facilitates business-to-business (B2B) consumer transactions through its website. The company deals with aspects such as buying and selling items online at home and abroad. The logistics firm mentioned that the site has 175 million functional users, with nearly 24 million UK people visiting the website monthly.

Additionally, Marks and Spencer is another big British retailer, with a generated revenue of £9 billion in both the UK and international markets.

These are just some of the many thriving e-commerce industries in the UK. Among the fastest-growing stores in the UK market is htfw.com. The e-commerce Market Analysis mentioned that the "store achieved online net sales of about £17 million in 2021", adding that "its revenue growth amounted to 496% in the previous year."

E-commerce vs Traditional commerce

With a simple tap of our phone, we can craft an effortless and convenient shopping experience from the comfort of our homes. The rise in e-commerce has provided us with unprecedented access to goods and services without requiring so much as leaving the couch.

Electronic commerce, popularly called e-commerce, is the buying and selling goods and services by individuals and companies over the internet. Nearly everything can be purchased through electronic commerce today as many people use credit cards, debit cards, digital wallets, and net banking to process daily payments.

Benefits of e-commerce

One of the biggest benefits e-commerce affords customers is choice. With e-commerce offering a massive array of products, the freedom to choose has become unprecedented.

Consumers no longer have just a few brick-and-mortar stores at their disposal; they can now browse through an almost infinite number of options from anywhere in the world with just one click.

Another benefit to buying and selling online is convenience. Given that online business has no closing time, consumers can order whenever they please. While this flexibility in timing is great for the buyer, it also makes perfect sense for the seller. This is because sales can pour in at any time of the day the buyer decides to shop. In addition, with an online presence, businesses have access to a global customer base and require much lower start-up costs than traditional stores, as they don't have to pay rent and property taxes.

Risks of e-commerce

With all these benefits, e-commerce also has its drawbacks. Firstly, customers risk being defrauded as mischievous people can hijack their personal information and card details. In addition, E-commerce stores are also exposed to e-commerce fraud which can be stolen or fake credit cards, affiliate fraud advertising, and use of fake identity. All of these inevitably lead to a decrease in revenue.

Traditional commerce

The concept of traditional commerce is as old as the earth itself. Before the invention of money, people traded through the barter system, where goods were exchanged with other goods instead of money. Traditional commerce involves the buying and selling of goods and services in person. This practice has gradually declined in popularity since the invention of e-commerce in the late 20th century.

Despite the rise of digital networks and online buying, traditional physical commerce is still very popular worldwide. This is because many people feel safer seeing the products or services in person before they make payments for them. Additionally, buyers can foster stronger relationships with business owners when they establish genuine face-to-face contact. A sense of trust emerges from this form of shopping which endures even after a purchase, and trust is a critical element in trade.

The future of e-commerce in the UK

The Trade Commission has stated that the UK is the largest e-commerce in Europe and the fourth largest in the world. Internet retailing sales in the UK from 2014 to 2018 increased from £10 billion to nearly £70 billion.

Furthermore, research from Statista revealed the fashion industry has been pushing up the overall e-commerce market in the country. According to the Trade Commission, growth in this sector has greatly risen due to the emergence of online players like Net-a porter and ASOS.

Data published by the Office of National Statistics UK (ONS), showed that consumers relied on the internet to make payments for other leisure activities and services such as accommodations, event tickets, booking holiday and travel arrangements.

In addition, revenue in the eCommerce market is projected to reach £168.70 billion in 2023. It is also expected that the revenue in the eCommerce market will show a 7.26% annual growth rate (CAGR) from the year 2023 to 2027.

In the retail sector only, online sales constituted nearly 30% of overall retail sales in the country in 2021, over double the amount from exactly 10 years prior. As a result of the covid-19 pandemic in 2020, internet retail sales increased by 47%, the fastest rate recorded in the previous 10 years. While such steep growth was case-specific to the pandemic, the UK's e-commerce revenue is still expected to grow steadily in the coming years across all segments.

Further research from Statista showed us that the revenue of the UK e-commerce industry is predicted to continuously thrive by £69 billion (+42.88%) within the next few years. According to this prediction, in 2025, the revenue will have expanded for eight years in a row to £230 billion. Notably, the revenue of the e-commerce industry was continuously increasing over the past years.

Conclusion

People have become increasingly reliant on the convenience of e-commerce since its emergence in the late 90s. Online shopping is now the preferred method for many customers worldwide due to its convenience. As the industry paves an innovative new path into our modern lives, it will be interesting to see how traditional commerce fares in the years to come.