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Coronavirus: Thousands of businesses launch online shops as lockdown creates digital economy boom

Abigail Fenton
·Writer
·3-min read
More than 85,000 businesses have launched online stories since lockdown began. Photo: Tim Goode/PA
More than 85,000 businesses have launched online stories since lockdown began. Photo: Tim Goode/PA

The COVID-19 crisis has sparked a retail transformation in the UK, with more than 85,000 businesses launching online stores or joining online marketplaces in the last four months.

AI monitoring of business websites across the UK’s small-to-medium businesses (SMEs) by marketing company Growth Intelligence found the highest number of new e-commerce offerings ever recorded over a four-month period.

With more than 750,000 businesses forced to close their doors under lockdown restrictions, businesses in nearly every sector have accelerated their digital transformation to adjust to the “new normal” and meet growing demand for online shopping.

As well as businesses that have historically dominated the e-commerce space, the crisis has seen some less likely businesses going online.

READ MORE: Shops slash prices at fastest rate in 14 years as spending dries up

The fashion and apparel sector has seen the largest number of businesses opening e-commerce sites since February, with 8,665 clothing companies adding online payment methods and new e-commerce technology.

However, manufacturing (7,129), food and drink retail (4,156) and agriculture, fisheries and industrial food production (3,767) are not far behind.

Among the industries seeing the biggest transformation have been pharmacies, 9.3% of which launched new ways of selling online during lockdown.

Farms, fisheries and industrial food production followed with 6.9%, as well as professional training, where 6.8% of businesses in that sector launched a way of selling online.

Breakdown of which industries have seen the most eCommerce launches. (Growth Intelligence)
Breakdown of which industries have seen the most eCommerce launches. Source: Growth Intelligence

With online shopping seeing a notable rise in lockdown, many businesses that would historically have distributed via shops, restaurants or distributors have started selling direct to customers for the first time.

Different parts of the UK have experienced varying rates of digitisation. The south-west has seen the most businesses launch e-commerce offerings in relation to the total number of businesses in the region, with 4,170 online shops created.

The south-west is followed by Yorkshire and the Humber (3,313 launches) and the east midlands (3,120).

Scotland has seen the smallest proportion of businesses launching e-commerce (2,277).

Breakdown of which regions have seen the most e-commerce launches in proportion with the number of businesses in the region (Growth Intelligence)
Breakdown of which regions have seen the most e-commerce launches in proportion with the number of businesses in the region. Source: Growth Intelligence

The research found that of the 762,250 businesses that were forced to close due to the pandemic, only 308,861 (41%) have fully reopened, with 453,389 (59%) either still closed or trading under severe revenue-limiting restrictions. These include limited hours, limited locations, seeing clients by appointment only, adding waiting lists, cancelling historical orders or only serving key workers.

However, with many employees still on furlough and movement still restricted, tens of thousands of businesses are surviving and even thriving by pivoting their business model online.

Tom Gatten, CEO of Growth Intelligence said: “It's remarkable to see the speed at which small businesses across the country have adapted.

“Being unable to trade in the traditional sense has been a catalyst in driving digital transformation and where one door has closed, this nation of shopkeepers has forced another to open.

READ MORE: Ocado raising £1bn to capitalise on growth in online grocery

He added: “Thousands of businesses are making the most of the tremendous opportunity that growing demand for online shopping is creating.

“While our data shows a very slow return to what we previously considered ‘normal’, the new environment is opening new markets and this will reinvigorate the economy.”