UK Small Online Business Trade Summary 2015

In recent years, technology has ensured more equal economic opportunities for small and medium sized businesses (SMBs). Since 2011, the eBay Public Policy Lab and a team of economists at Sidley Austin LLP have been working together to examine how globalisation and technology are liberating the ambitions of SMBs.

This report presents new findings coming out of this collaboration, exploring what is nothing short of a trade revolution and the impact this is having in the UK. It will also show how economic activity of small online businesses is emerging across the country. Sidley economists have measured the “Digital Density” of UK regions by assessing the number of small businesses on eBay alongside their location and volume of sales.

The analysis carried out by Sidley Austin for this report is based on a study of data covering transactions on the eBay Marketplace from 2010 to 2014. Sidley economists then looked at which sellers are registered in the UK. To ensure that the community of small online businesses on eBay were fully
captured, the data was limited to transactions by sellers with sales of more than $10,000, (approximately £6,400) annually on the eBay Marketplace. These are called “Commercial Sellers”, or small online businesses. Sometimes, for short they are referred to as eBay SMBs.

The research results show that technology is opening up tremendous opportunities for SMBs across the UK. Technology is reducing barriers to global markets by allowing SMBs access to services that were once the preserve of large firms, such as smart shipping, international payments and translation. Based on an analysis of this data, Sidley economists estimate trade costs to be four to five times lower on the online marketplace compared to the traditional marketplace, and this is something UK small businesses are taking advantage of.

A massive 91% of SMBs on eBay in the UK export – far higher than businesses that have not embraced online – and they reach on average 20 different countries annually. They are effectively Small Global Traders, and they operate from almost anywhere in the country. Thanks to technology, businesses do not need to be located in the UK’s more central or prosperous regions, and entrepreneurs are not tied to any particular geography. The research results presented in this report paint a picture of a much more inclusive marketplace: not dominated by a few “superstars”, but rather welcoming to startups, and encompassing the whole of the UK

The report does not just rely on eBay data but contrasts research findings from the eBay Marketplace with “traditional” trade data publicly available elsewhere – in particular World Bank and Eurostat data and surveys.

As in previous reports, the eBay Marketplace provides the illustration of a new model for trade that is emerging, one that increases the prospects for more broad-based growth. These findings allow for wider conclusions about trade and growth that go far beyond eBay itself.