March 7, 2021

UK web ecommerce growth accelerates to 21%

Dr Peter Mowforth

Every year the UK Government Office of National Statistics publishes an annual survey of ecommerce in the UK. Anyone wanting to hear some good about our economy should give it a read on the ONS website.According to the report, Ecommerce, just in the UK, has a turnover of £560 Billion. As happens every year, I contacted the ONS and requested if they have any data for Scotland. As happens every year, I get the same reply “we do not provide a regional breakdown” !

Ecommerce Growth is accelerating

The ONS says that ecommerce growth is at its fastest rate since 2011. The following graph, copied from the ONS, shows growth of online retail ecommerce. By eye, I fitted a rough regression curve to the data. The point to note is that the latest growth figures are accelerating:

The most likely reason for the acceleration in ecommerce growth is down to the large number of recent high-street closures. This relentless news about the loss of traditional outlets for retail is likely to accelerate still further in February 2019 when many shop leases are up for renewal. Although traditional retail outlets still account for the bulk of retail trade, the loss of critical mass makes the high-street ever-less attractive for shoppers. These changes have major consequences for cities. They lower the income of local councils through the rates system. In Scotland, these changes mean a progressive export of both jobs and balance of trade to those parts of the UK that disproportionately dominate the UK ecommerce landscape. These areas are primarily greater London and the English midlands. Manchester in particular has also established itself as a major International ecommerce hub.

Web overtakes EDI

One other noteworthy headline from the ONS report is that, for the first time, web-based ecommerce has finally overtaken EDI. Electronic Data Interchange was the earlier generation of ecommerce trade. It’s been used for supply chain electronic purchasing between businesses. As more and more of the IT systems used by companies get joined-up, EDI is being phased out in favour of web-based solutions.The report says that web-based ecommerce sales now account for approximately £300 billion of trade while EDI accounts for around £286 billion.According to the report the growth rate of web-based ecommerce in the UK is 21%. To put this into context, the growth rate of the entire Chinese economy is currently 6.5%. This then begs the question that if ecommerce accounts for £560 billion of the UK economy and is growing at 21% then what’s the rest of the economy doing?

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