Despite a climate of continuing economic uncertainty and fears of a double dip recession, online businesses are expected to continue to thrive with the number of million pound businesses on eBay exceeding £1m projected to double to 127 during 2010.
During 2009, the number of businesses in the million pound club stood at 66. Of those, seven achieved the milestone from a standing start, breaching the million pound barrier despite the fact that they only began operating on the site in 2009.
The growth of these businesses represents a coming-of-age for small businesses trading online in the UK. In 2007, only a handful of businesses on eBay boasted turnover of a million pounds and over. Now, it is set to reach three figures, signalling the growing role that small businesses are playing in driving e-commerce in the UK.
The success of these online businesses is reflected in eBay’s recent global results which revealed that the UK business was growing at a faster rate than the rest of the e-commerce market, with consumers returning more frequently and more new users turning to the site. Many small businesses choose to trade through eBay because it offers lower costs of entry and access to an unrivalled global customer base.
Of the 127 businesses projected to break through the million pound mark in 2010, there is consistent evidence of strong business growth:
- The average rise in turnover during 2010 is projected to exceed £600,000 per business.
- 25 of those businesses are projected to achieve a rise in turnover of 100% or more during 2010. 14 will achieve a rise in excess of 200%, and 11 a rise in excess of 300%.
- Of the 66 businesses which turned over in excess of £1m in 2009, only 8 experienced a dip in turnover.
Warren Blayds, from Oldham has seen his baby items business Online4baby grow to be one of the top ten UK businesses on eBay and the largest nursery products business on the site. His annual turnover is £4million which has almost doubled from 2007. He generates an average sales volume more than double what he was trading in 2007. All sales are fixed price, with an average selling price of items at £50 and his most expensive sale is a room set for £600.
“Online4baby evolved from the foundations of a family business established in 1987. As the company grew in popularity and as more customers demanded immediate delivery, we shifted operations on to eBay.
“Over the last few years, we’ve had to become more competitive and make stricter purchasing decisions, to ensure our products remain cheaper than the exact same items found on the high street.
“Before I launched Online4baby, I was working in a mundane office job. But our success has meant that I have been able to hire more staff, gain invaluable business insight and expand the company.”
Warren soon hopes to buy larger premises and expand his website in the future, and with his sole income being from eBay, he feels confident this will be easily achieved.
Jody Ford, eBay’s Director of SMEs on eBay said:
“eBay has always backed British entrepreneurs and it is tremendous to see this surge in the number of thriving online SMEs and start-ups at a time when the rest of the economy has been struggling.
“eBay is the UK’s number one e-commerce site and we provide a market place for over 160,000 small businesses, to access the 17 million people from across the globe who visit the site every month. Despite the recession, over the last two years we’ve seen more than 25,000 people take the plunge and set up their own businesses.
“The success of these million pound businesses should encourage all entrepreneurs, from those with a longstanding business plan to graduates or school leavers with a great idea – as it shows that if you have a good business model and understand the demands of your customers you can be an overnight success.”
- Founded in 1999, eBay.co.uk is the UK’s number 1 e-commerce site, providing a platform for over 17m unique visitors per month (Nielsen / Netratings, January 2010) to buy and sell new, unique and used items in a fun and easy way.
- No longer simply an online auction house, eBay currently has 17 million live listings on the UK site, with fixed price goods accounting for the majority (56%) of items sold globally.
- 160,000 registered businesses and 24 high-street retailers use eBay.co.uk to reach the UK’s largest online shopping audience.
- eBay supports buyers and sellers by promoting the best value deals through Daily Deals, and the eBay Outlet sells products from well known brands at up to 70% off the recommended retail price. Follow www.twitter.com/eBay_life4less for alerts to great deals on eBay and beyond.
- eBay campaigns on the issues affecting businesses in a number of ways, including the eBay Online Business Index and consumer choice campaigns as featured on http://consumerchoice.eu/uk/
- eBay.co.uk is owned by eBay Inc, which has expanded to include some of the strongest brands in the world, including eBay, PayPal, StubHub, Shopping.com, and others.
Case studies of eBay millionaire businesses
Warren Blayds, from Oldham, Greater Manchester runs Online4baby and is eBay’s largest seller of nursery items for babies and toddlers
Warren began trading on eBay under Online4baby in 2005 and with a feedback score of over 90,000 from happy customers, it has become the biggest nursery products UK business on eBay.
Online4baby evolved from the foundations of a family business established in 1987 which consisted of a large group of outlets supplying discounted nursery products to generations of families, selling the latest recognised brands and products at the cheapest prices. However, with the company’s increasing popularity and customer demands for immediate delivery, Online4baby set up operations on eBay.
Since 2007, Online4baby has been forced to become more competitive and make stricter purchasing decisions to remain cheaper than the same items found on the high street.
Previously trapped in a mundane office job, Warren has found Online4baby’s eBay success has enabled him to hire more staff, gain invaluable business insight and expand the company. He hopes to buy larger premises and expand his website in the future, and with his sole income being from eBay, he feels confident this will be easily achieved.
Anthony Ponsford, from Wiltshire sells a number of high quality products under the trading name Piranha Trading
Anthony began trading on eBay in 2003 as Piranha Trading. Anthony sells a huge variety of quality products – from computer desks to ladders and chicken houses – responding to ever changing consumer demands at competitive prices.
Before trading on eBay, Anthony was a city corporate lawyer and often worked sixteen hour days, seven days a week. He believes his career change has given him his life back, and asserts that “for the first time I am motivated to get out of bed in the morning”.
Between 2007 and 2009 Piranha Trading significantly increased its annual volume of sales from just over £39,000 to over £820,000 and has forecast a turnover of £1.3 million in 2010. Anthony also expects to achieve a gross margin of over 20% in 2010 after all VAT, fees and carriage costs have been deducted.
Online trading is now Anthony’s sole income and he employs two full time members of staff: one customer services representative and one warehouse manager.
Since he began trading, Anthony has steadily grown his business despite a recession and working capital constraints. By avoiding trend and seasonal products and instead stocking “quality bargains”, Anthony has managed to achieve a steady income every year.
David Hayward, from Merseyside, operates Valatech Computers a high growth IT product sales company
David began trading as Valatech Computers on eBay in 2007 and now lists over £100,000 worth of goods on the site every month. The average selling price of items on Valatech Computers is over £100 and David has forecast that the business will turn over more than 1.5 million in 2010.
The business has doubled in size year-on-year for the past three years and is now employing seven full time permanent members of staff and two part time web developers.
Before he started the company Dave worked in IT sales. Using his experience in IT he is able to offer products that compete with the large high street retailers. After using eBay for the first time to sell surplus software, Dave decided to set up an eBay shop which now accounts for sixty percent of his income. Dave works with over seventy suppliers from across Europe and is also currently in the process of increasing the number of products he lists on eBay from twenty thousand to ninety thousand in total.
Dave believes he has managed to beat the recession by stocking niche products that are difficult to purchase elsewhere. Also, as one hundred percent of Valatech Computers listings are fixed price as opposed to auction, and because the business trades through eBay as opposed to on an independent website, customers regard Valatech Computers as a convenient and trusted online retailer.
Jeremy Wicks, Essex based seller of consumer electronics, specialising in b-grade DJ and pro audio equipment
Jeremy started his business Why Buy New UK in 2003 with the vision of offering consumers cut price b-grade electronics but with the advice, customer care and general professionalism usually only associated with companies selling from big name companies.
Although Jeremy listed around 100 items per month on eBay from the company’s conception in 2003, it wasn’t until 2007 that he decided to use eBay to sell large percentage of his stock as he was obtaining more than his own website could handle.
He now sends out over 1,500 eBay orders per month, employs twenty two full time members of staff and has forecast a turnover of four million pounds in 2010. Jeremy sells 100% of his products as fixed price items and expects to achieve a gross margin of 20-25% in 2010 which will help fund the multiple websites and retail outlets that Jeremy now trades from.
The extra business that Jeremy has generated since he began selling through eBay has helped fund continual growth and expansion. Despite going without a salary for three years from 2003 and fighting off cancer in 2009, Jeremy has purchased a new warehouse and office complex and has employed more staff to meet with the growing demand for his products.