The aftermath of the pandemic hasn’t just changed the way we live and work, but also how we do business, a new survey shows.
While the rise of digitisation — such as digital marketing, online payment systems, and automation — was already prevalent pre-pandemic, reliance on digital solutions has practically skyrocketed in the last five years.
The survey by web hosting company GoDaddy finds that UK firms are increasingly dependent on their website. More than half of entrepreneurs now say that their main income source comes from digital channels, making this the new normal for business.
Digital channels are now the backbone of many businesses
At the peak of the pandemic, ecommerce businesses boomed as many companies moved online. Now, the GoDaddy research suggests this migration is still going strong today.
According to GoDaddy, 52% of entrepreneurs now say that their main income source comes from digital channels, compared to 45% during the pandemic.
Statistics show the UK is now the third-largest market globally for ecommerce, with 163,278 active limited companies involved in ecommerce sales (excluding sole traders). Meanwhile, the global ecommerce market is expected to reach $6.56tn by the end of 2025.
Is running a physical business unaffordable?
One reason for the rise in these ‘e-entrepreneurs’ is the rising cost of business premises.
Today’s economy has made it significantly harder for businesses to secure affordable locations. 26% of respondents from GoDaddy’s survey cite this as a major obstacle, an increase from 6% in 2020.
Nowadays, the cost of rent for commercial buildings is almost through the roof. Unsurprisingly, London was reported to be the most expensive location to start a high street business. But the issue is rife across the whole of the UK.
There are also business rates to consider. The government claims it will permanently cut rates for high street properties in retail, hospitality and retail from 2026. Until then, a commercial property with a high rateable value can quickly eat into profit margins.
Online is easier, but you’ll have to fight for it
Digital marketing has made it easy for businesses to promote their offerings through a variety of channels, without having to spend an extortionate amount of money.
However, with so many new businesses entering the market (5.5 million small businesses and SMEs were recorded at the beginning of 2024) standing out has become a significant challenge for many.
Respondents to the GoDaddy survey also report that online marketing is today a major hurdle. That represents an increase from 15% to 20% in the last five years.
According to a report by LocaliQ, 36% of businesses cited increasing competition as one of their biggest challenges for successful marketing.
Will digital businesses take over?
While ecommerce and digital businesses may continue to dominate, it’s unlikely that physical businesses — whether retail stores or restaurants — will disappear completely.
For example, while 2024 saw a large number of high street closures as brands went into administration, research finds there have been 324,995 new retail businesses, with small businesses and SMEs making up over 99% of them.
With ecommerce still on top, UK businesses are likely to stick to the digital route, but that doesn’t mean traditional methods will go away completely. Many businesses will find a way to use both, using the digital space to reach a wider audience while still offering the personal touch or physical presence that customers appreciate with in-person experiences.
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