In the UK, the number of ecommerce businesses has reached an all-time high of 166,052, with 56,616 new startups created in 2024 alone. This surge highlights the sector’s ongoing vibrancy, making ecommerce the most common business type registered this year. With ecommerce now representing 30% of retail sales—its highest share since the pandemic’s peak—the future of the sector looks positive.
However, there are some signs of concern. Although new ecommerce businesses continue to be established, growth has slowed compared to 2023, when over 67,000 new businesses were created. While this is often a natural progression in emerging industries, it’s a trend worth noting. Additionally, 7 in 10 ecommerce businesses fail within their first year, a figure that remains more than double the average rate of business failure.
More of a concern is the significantly higher failure rate – 70% – amongst ecommerce businesses than for startups outside the sector. While the rate of attrition for all business types rests at an average of 30%, for ecommerce start-ups, that figure jumps to a massive 70%. Begging the question of why.
Ben Sztejka, ACA and founder of Your Ecommerce Accountant, comments: ‘There are multiple reasons why ecommerce businesses may be more susceptible to failure than other business models, but the primary reason is that ecommerce business owners are normally novices to business. As a result of this, they don’t always understand business concepts or their numbers.
‘You can have the best products and marketing ideas in the world, but if you don’t keep track of your financials, your business will inevitably come under pressure, if not fail.
‘The number one thing any ecommerce business owner can do to support success and become one of the 30%, is to understand their profit and loss. By learning to understand their numbers and monitoring them, they have the data they need to make informed decisions – to pivot when required, change prices, change marketing strategy, and actually make a profit.’
