£459.2 Billion. Wow, that’s a big number
£459.2 billion is the UK Office of National Statistics' most recent estimate on the size of web-based ecommerce just in the UK. With Scotland having 8.2% of the UK population then, if ecommerce is performing at the same level as the rest of the UK then we might reasonably expect Scottish ecommerce turnover to be £37.65 billion. That would make it around the same size as all fintech investments + the entire oil, gas, food and drink industries … all combined. That’s around double the size of the entire healthcare budget of Scotland! Statista shows that global ecommerce has grown and is likely to continue to grow at a steady half a trillion dollars a year. Ecommerce is huge and growing. Importantly, it does so in a steady and predictable fashion. Ecommerce is, by a very significant margin, commercially larger than any other activity or area of interest within the digital ‘sector’.
At the sell-out Ecommerce Scotland 2024 event at the Glasgow Science Centre on 14th March 2024, where most of Scotland’s ecommerce shakers and movers congregated, none of this came as a surprise. The majority of companies were seeing steady growth in line with ONS data which shows incremental month by month increases along with seasonal variations:
Internationally, the UK is an ecommerce powerhouse that’s out-performed only by China and the US in the total volume of goods sold online. UK Ecommerce is approximately the same size as ecommerce in France and Germany combined. The average UK online buyer purchases around twice as much as people in the US.
Traditional high-street retailers could and should use the Internet to win new sales and customers. Every Scottish retailer, wholesaler and trader should ensure that their free business profile is available on the web. Every business should show their location(s), what they do and what they sell along with contact details, photos and reviews. If you already have an online store then you can even highlight exactly what products are available and in-stock. Rather than seeing online as a competitor to traditional trade, high street retailers should see it as an opportunity to better connect with their customers and sell more products.
Walkers Shortbread have recently embraced the online channel - particularly into overseas markets. John Bruce, their Ecommerce Commercial Manager, has managed to more than double UK sales while opening up new markets in the US, Canada, Singapore and Japan.
Iain Barbour, of Jamieson Brothers in the Scottish Borders has seen multi-million online trade grow rapidly. “Taking our B2B and B2C business direct to people's homes either via their PC or mobile device has been a real game changer instead of relying on footfall through the doors. Investing in systems that allow us to automate tasks that used to be manual human chores has been key to our scalability. We can now not imagine our business not being online.
Local entrepreneur, Jamie Macdonough has been able to create seven figure sales figures selling beauty and life-style products - particularly into the US market. “Our use of tools that make use of AI and Machine Learning have been key to our rapid growth, high productivity and scaling. Automating every part of the business should be a key obsession for every ecommerce business owner”.
Chisholm Hunter, the Glasgow-based jeweller now wins significant online trade from across the UK which was reflected in their recent turnover and their 11-fold profit surge and 87% sales growth to £54m.
OhPolly, the Scottish online ladies fashion brand, fulfills 15,000 ecommerce orders daily with the largest increases taking place into overseas markets. Their EV delivery partner in London helps them meet their goals for improving their sustainable low-carbon objectives as they grow annual sales to £113m.
For those that did attend ecommerce Scotland, whether they were selling pizza ovens, clothing, potato crisps, whisky or seed potatoes, they were all using variations around the same technology and tools. They were all using similar Standard Operating Procedures and similar ecommerce marketing channels. Everyone shared the same language and acronyms and every ecommerce team was heavily engaged with the rapid adoption of Artificial Intelligence & Machine Learning. Many of those attending talked about their ambitious targets around productivity where several were already achieving turnovers in excess of a million Pounds per employee in parallel with decreasing their carbon footprint through the use of recycled packaging and all-electric fulfilment. This narrow set of unified goals, levels of performance, supply chains, business technology, techniques and processes are what you would expect to see from an area classed as a sector.
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A unifying feature for those involved in ecommerce has been their shared use of common tools such as their ecommerce platforms. Common examples include Shopify, Magento and BigCommerce. These platforms are the hub for the online business. As well as selling directly, they typically connect directly to marketplaces such as Amazon or eBay. They allow businesses to show what products are available to customers along with prices, stock-levels, imagery, product reviews and fulfilment options. AI & ML are used extensively to optimise pricing and product targeting, cross-selling and up-selling as well as personalisation and optimising around seasonality. They commonly connect to accounts packages and integrate with warehouses, fulfilment partners and CRM/ERP packages. They manage B2C and B2B sales both locally as well as using translated content for overseas markets. At the Ecommerce Scotland event we collected anonymised data on different ecommerce platforms and plotted turnover v productivity (measured as turnover per employee) for attending businesses:
Results (subject to the relatively small sample size (n=57)) indicate that:
Given that Magento was repeatedly associated with high turnover businesses we looked to see how many businesses are making use of Magento in Scotland compared to other parts of the UK.
According to StoreLeads.app, the total number of Magento sites in Scotland is 134. The same tool, applying the same calculations and methodology, was able to identify 3,413 Magento sites in England. This aligns with Magento search figures in different parts of the UK. Together, these figures contribute circumstantial evidence that Scotland has a proportionately lower level of ecommerce activity when compared to, for example, England.
The ecommerce business community is keen to engage with those helping shape our national economy and would welcome the opportunity to work with those wanting to see a wealth creating, sustainable, high-productivity, inclusive and socially aware future for our nation. A few zero-cost or low-cost ways that Government and public sector agencies could quickly facilitate this would be to help advertise and promote the events run by local businesses such as the EcommerceScotland event or the free online Ecommerce Club which helps network, inform, educate and inspire growing ecommerce businesses.
The Scottish Government should press the UK Office of National Statistics to provide a breakdown of ecommerce performance in different parts of the UK. Such information is currently not available. Scotland helps pay for the ONS so getting access to such information would help us set targets and measure improvement in what should be a significant part of our national economy.
A high proportion of SMEs, which represent 98.2% of all Scottish companies, could and should be using ecommerce to grow and scale their business. The Scottish Government’s most recent survey shows that 61% of companies are not selling online while those that are are mostly selling in low volumes. A small percentage change with these numbers would have transformational consequences for the economic performance of our nation.
Next year, Glasgow celebrates its 850th Aniversary. Glasgow is a city that was defined by trade and built on trade. If we want Glasgow to suceed in the 21st century then we need to give ecommerce, symbolic of 21st century trade, an identity as a sector, accreditations as a profession, a section heading in our economic strategy, skills training as a career and statistics so we can measure performance. Do that, and as it says in our city motto, it will help let Glasgow flourish.