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UK Ecommerce Market Report

UK ecommerce market report

UK Ecommerce Market Summary

The UK is a mature and continuously innovating e-commerce market
• E-commerce in the UK is supported by advanced digital and physical infrastructure, high internet and
smartphone penetration, and excellent logistics links to Europe and the rest of the world.
• The UK has the third highest e-commerce conversion rate globally, at 1.9 percent, beaten only by
Germany and the U.S. Shoppers are highly sophisticated and expect excellent payment, tracking and
delivery services.
• The UK acts as a testbed for emerging e-commerce and omnichannel models. For example, innovative
rental sites and secondhand online marketplaces are teaming up with legacy brands and retailers.

The UK is a compact island nation with an expansive e-commerce culture

The UK is a global leader in e-commerce with 84 percent of citizens online, one of the highest proportions of online consumers of the countries included in our report series. E-commerce accounts for 27.9 percent of all retail sales in the UK,3 and with
an average online spend of EUR 4,115 (US $4,700) per person,4 the business to consumer e-commerce market was worth EUR 235.3 billion in 2020. Despite being a long-established market, e-commerce growth is projected to continue at a compound annual growth rate (CAGR) of 7.2 percent to 2024.

The UK is a stable and growing e-commerce market in which consumers are willing and able to adopt new ways to shop and pay

A mobile commerce leader, the UK is a launchpad for TikTok shopping

Out of the major markets, the UK is second only to China for mobile commerce. Some 63 percent of transactions take place on a mobile device, and just under half of these purchases (48 percent) are made via an app. Growth in mobile commerce is projected
to outpace overall e-commerce, expanding at a compound annual growth rate of 10.1 percent to 2024. App-based social commerce is well accepted, with a third (33 percent) of UK consumers shopping directly via social media, ahead of its European counterparts. The UK is acting as a testbed for in-app e-commerce on TikTok. From May 2021, UK users have been able to tap and
purchase instantly via brands such as L’Oréal’s TikTok accounts, or through affiliated influencer’s accounts.

In the UK, cards and digital wallets are the payment options to master at checkout

Cards are used in just over half (52 percent) of all e-commerce transactions, with digital wallets the second-most popular payment option, used in 28 percent of all online sales. PayPal is the dominant digital wallet. Cash, at 7 percent, is the third-most
used option. The growth in mobile commerce will support ongoing digital wallet growth, with Apple Pay®, Google PayTM and Visa Checkout all expressly designed for smartphone use and easily integrated into shopping apps. Buy now, pay later options are now a common sight at online checkouts in the UK. This requires consumers to agree to automatic bank transfer or direct debit
payments spread out over weeks or months. This is contributing to an 18 percent compound annual growth rate in bank transfer payments to 2024, the highest anticipated growth rate out of all
payment types.

The UK is a nation comfortable with cross-border online shopping

International purchases account for a quarter (25 percent) of all e-commerce sales – a significant amount, which suggests high levels of opportunity and receptivity to international merchants hoping to court UK buyers. Despite Brexit, cross-border
purchasing is still commonplace within UK online shopping culture, with 55 percent of British online consumers making international purchases. The most popular countries to shop from are China (43 percent), the U.S. (20 percent) and Germany
(9 percent). Both China and the U.S. provide access to competitive pricing and a vast product inventory.

Innovative rental and ‘re-commerce’ models sign deals with big-name retailers in the UK

As sustainability concerns move up the public agenda, ‘re-commerce’ is emerging. Rising online sales of secondhand products is particularly pronounced in the luxury and designer clothing markets and among the Gen Z generation. The UK’s secondhand
clothing peer-to-peer platform Depop was scooped up by U.S. giant Etsy for US $1.6 billion in June 2021.

E-commerce rental marketplaces are also gaining ground in the UK. They are also being used by physical retailers to enhance their own omnichannel offerings. For example, online clothing rental site Hurr now has physical sites in retail department store
chain Selfridges.

@UK Ecommerce Market Report by JP Morgan

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