With 56,616 new online businesses created in 2024, e-commerce is currently among the most vibrant sectors of the UK economy. In fact, e-commerce is the most common business type registered in 2024. And with the ONS showing that e-commerce now represents 30% of all retail sales – the highest rate since the peak of the pandemic – the outlook for the sector appears positive. 

However, there are some areas of concern for e-commerce businesses to be aware of. Firstly, while new e-commerce business creation remains high, growth does appear to be slowing, with new business formations down on 2023, when more than 67,000 e-commerce startups were registered. This is often the pattern of new industry growth, so perhaps not worth too much attention. 

More of a concern is the significantly higher failure rate – 70% – amongst e-commerce businesses than for startups outside the sector. While the rate of attrition for all business types rests at an average of 30%, for e-commerce startups, 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 e-commerce businesses may be more susceptible to failure than other business models, but the primary reason is that e-commerce 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 e-commerce 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.”