The United Kingdom is an interesting market
The United Kingdom is an interesting market for consumer products for several reasons:
- Strong economy: The UK has a strong and stable economy, which means that consumers have higher disposable incomes and are more likely to spend money on products and services.
- High population density: The UK has a relatively high population density, with a large number of people living in urban areas. This means that businesses have access to a large market of potential customers in a relatively small geographic area.
- Diverse consumer base: The UK has a diverse population with a wide range of cultural backgrounds and interests. This means that businesses can offer a wide range of products and services that cater to different consumer needs and preferences.
- Access to international markets: The UK is a gateway to other European markets, and English is widely spoken throughout the world. This means that businesses based in the UK can access a global market and easily communicate with international customers.
- Established e-commerce infrastructure: The UK has a well-developed e-commerce infrastructure, with a high rate of internet penetration and a large number of consumers who are comfortable shopping online. This makes it easier for businesses to reach a wider audience and sell their products through online marketplaces such as Amazon and eBay.
Two ways of selling your products online
In general, there are two ways if you want to sell your products online in this market:
- Through an open platform like Amazon, Ebay or Rakuten where you can set up your own shop
- Through a (specialised) online distributor, who will buy your products and sell them on its website.
Selling on a platform like Amazon involves listing your products on that marketplace, which allows you to reach a large number of potential customers who are already shopping on the platform. As a seller on Amazon or other platforms, you are responsible for managing your inventory, shipping products to customers, and providing customer service. The platform charges fees for its services, including a referral fee and a fulfilment fee if you choose to use the platform’s fulfilment services.
On the other hand, selling through an online distributor involves partnering with a company that specialises in distributing products to retailers or other sellers. The distributor will take care of the logistics of getting your products to retailers or other customers, such as warehousing, shipping, and handling returns. In exchange for their services, distributors typically charge a fee or take a percentage of the sales.
Benefits and fees of open platforms
Let’s compare the three main platforms in terms of benefits and fee structure:
- Large customer base: Amazon has a large and loyal customer base in the UK, with over 27 million active users.
- FBA services: Amazon offers fulfillment by Amazon (FBA) services, which enables sellers to outsource their warehousing, shipping, and customer service needs.
- Marketing tools: Amazon provides a range of marketing tools to help sellers promote their products and reach new customers, including sponsored products and advertising.
- Professional selling plan: £25 per month subscription fee, referral fees ranging from 6% to 45% depending on the category of the item sold, and variable closing fees for media items.
- Individual selling plan: No monthly subscription fee, referral fees ranging from 45p to 45% depending on the category of the item sold, and variable closing fees for media items.
- Large customer base: eBay has a large and loyal customer base in the UK, also of around 27 million users.
- Store subscription options: eBay offers different store subscription options that provide sellers with additional features, including increased free listings and discounted fees.
- Marketing tools: eBay provides a range of marketing tools to help sellers promote their products and reach new customers, including promoted listings and marketing emails.
- Basic selling fees: insertion fee of 35p per listing (up to 1,000 listings per month) and a final value fee of 10% on the total amount of the sale (up to £250).
- Store subscription fees: Basic Store (£25 per month) with 200 free listings, Premium Store (£69 per month) with 1,000 free listings, and Anchor Store (£399 per month) with 10,000 free listings.
- Reach: Less used in the UK, but can still be an option to promote your products.
- Customizable storefront: Rakuten offers customizable storefronts for sellers, which enables them to create a unique brand identity and showcase their products in a visually appealing way.
- Seller support: Rakuten offers a range of seller support services, including dedicated account managers and training resources.
- Subscription fee: £30 per month for a Professional Shop subscription, which includes a range of features such as access to seller support and promotional tools.
- Transaction fees: A commission of 5% to 15% on the final sale price.
There are numerous online distributors in the UK that sell multiple brands and could possibly also include your products. This is a selection of the bigger websites:
- ASOS – https://www.asos.com/. ASOS is a popular online fashion and beauty retailer in the UK with a large customer base of primarily younger consumers. ASOS reported 24.9 million active customers worldwide in 2020 and had a revenue of £3.26 billion.
- Boohoo – https://www.boohoo.com/. Boohoo is a fast-fashion retailer that targets young consumers and has experienced rapid growth in recent years. Boohoo reported 18.9 million active customers worldwide in 2020 and had a revenue of £1.23 billion.
- Ocado – https://www.ocado.com/. Ocado is an online grocery retailer that has a large customer base in the UK, with over 800,000 active customers. In 2020, Ocado reported revenue of £2.3 billion.
- Wayfair – https://www.wayfair.co.uk/. Wayfair is an online retailer that specializes in home goods and furniture. Wayfair reported revenue of $14.1 billion globally in 2020 and has a large customer base in the UK.
- ASKET – https://www.asket.com/. ASKET is an online clothing brand that focuses on sustainability and offers high-quality essentials. The company has a loyal customer base and has experienced strong growth in recent years.
- Feelunique – https://www.feelunique.com/. Feelunique is an online beauty retailer that offers a wide range of cosmetics, skincare, and haircare products. The company has a large customer base in the UK and reported £103.5 million in revenue in 2020.
- Lovehoney – https://www.lovehoney.co.uk/. Lovehoney is an online retailer that specializes in adult toys and sexual wellness products. The company has a loyal customer base and reported £103.3 million in revenue in 2020.
- Moonpig – https://www.moonpig.com/uk/. Moonpig is an online retailer that specializes in personalized greeting cards, gifts, and flowers. The company has a large customer base in the UK and reported £368.2 million in revenue in 2020.
- Zalando – https://www.zalando.co.uk/. Zalando is an online fashion retailer that offers clothing, shoes, and accessories for men, women, and children. The company has a large customer base in the UK and reported €10.7 billion in revenue in 2020.
- The Hut Group – https://www.thg.com/. The Hut Group is a British e-commerce company that operates over 160 online stores across various categories, including health and beauty, fashion, sports nutrition, and luxury home goods.
In between: Notonthehighstreet
Notonthehighstreet is an online marketplace based in the UK that specializes in unique and personalized gifts, homeware, and fashion items. The platform was launched in 2006 and has since grown to offer products from over 5,000 small creative businesses across the UK.
Notonthehighstreet offers a curated selection of products that are handmade, one-of-a-kind, or personalized in some way. The platform focuses on supporting small, independent businesses and offers a range of products that are not typically found in traditional retail stores. Some of the popular categories on Notonthehighstreet include jewelry, home decor, wedding gifts, and children’s toys.
In this respect Notonthehighstreet is a mix of the two options above: it has its own overall product management, but once you are on it, you can manage your own shop.
Being online does not guarantee sales
While having an online presence can provide businesses with many benefits, such as increased visibility, the ability to reach new audiences, and cost savings, it does not guarantee sales. There are several reasons why being online does not guarantee sales:
- Competition: The online marketplace is highly competitive, and businesses need to differentiate themselves from their competitors to stand out. This can be challenging, particularly in crowded marketplaces.
- Marketing: Just having a website or online store is not enough to drive sales. Businesses need to invest in marketing and advertising to reach potential customers and drive traffic to their website.
- Trust: Building trust with customers is critical for online sales. Customers need to feel confident that they are purchasing from a reputable and trustworthy business. This can be particularly challenging for new or lesser-known businesses.
- Logistics: Fulfilment, shipping, and returns are critical components of the online shopping experience. If a business does not have a reliable and efficient process for these tasks, it can negatively impact the customer experience and sales.
Especially when introducing a product to a market marketing is needed. On open platforms like Amazon or Rakuten you can advertise or push your products, and invest in it directly. In our experience, in the beginning these marketing expenses may easily outweigh the revenue. Only when customers are returning the margins are moving to positive.
When working with an online distributor, that company may either ask for a low sales price, or for your involvement in the marketing. Having your social media accounts up and running, co-financing advertisement or doing (sampling) events can be important requirements to displaying your products.