1,000 UK firms receive sales of £1M through Amazon

More than 1,000 UK businesses reached the £1 million sales mark selling through Amazon last year, the marketplace giant has revealed.

With increasing numbers of shoppers spending online it also saw a 20 per cent increase in overall seller numbers to 65,000, with average annual sales at the firms rising 50 per cent to £300,000.

Amazon said that around 60 per cent of all physical product sales on its store in the UK were from independent sellers, most of whom were small and medium-sized UK businesses. Some 40 per cent of the businesses were based in London and the southeast of England, and the most popular goods included homewares, health, toys and beauty.

Exporters had also thrived on the platform, Amazon said, seeing their collective overseas revenues rise by 27 per cent to £3.5 billion.

Amazon’s growth in the UK over past ten years has been staggering, with its annual net sales rising from $4 billion in 2010 to $26.5 billion last year, making it the US giant’s second most important European market after Germany ($29 billion), according to research firm Statista. It was reported to have a 30 per cent share of the UK ecommerce market in 2019. Statista said it held a 9.8 per cent share of European online retail in 2020.

Some 30,000 UK firms are paying for Amazon’s fulfilment service, where they ship stock directly into Amazon’s warehouses for storage and direct dispatch to the consumer.

One firm using this service is Swansea-based Bloomsbury Mill, a children’s nursery textiles company founded in 2016. Tom Lloyd, the co-founder and commercial director, said: “While we’re the ones with the creativity and the business strategy, Amazon has played a key part in our growth, not only because of its role as an ecommerce platform taking plenty of day-to-day admin off our shoulders, but also through its fulfilment network helping us expand into Europe.”

Amazon charges its sellers fees covering storage, stock picking, administration, fulfilment, restocking, and any manual processing of consignments. It also charges a “referral fee” for every item sold. These range from 7 per cent for microwaves to 46 per cent for Amazon device accessories.

Since January 1, Amazon has told its UK sellers that it cannot fulfil orders between the UK and EU, with sellers instead required to send stock to its fulfilment centres on the continent. In June, it said UK firms using its fulfilment service could access its global stores on a free offer for three months.

With new EU VAT collection rules for ecommerce kicking in on July 1, Amazon is promoting its VAT service, which it is offering free for six months and then costs at least €33.30 a month for handling VAT returns in one EU country, but without fiscal representation (which is required in some countries, such as Ireland.)

While Amazon dominates the sector, other marketplaces are competing for sellers’ goods. On Tuesday, the French DIY and gardening goods marketplace ManoMano raised $355 million in its latest round of fundraising, giving it a reported $2.6 billion valuation. It said it was focused on growing its operations in the UK and Germany. Last year €1.2 billion in goods were sold on its platform, double the amount the year before.

At the same time some Amazon sellers are being approached by well-funded consolidators such as UK-based Heroes and US firm Thrasio. One consolidator, the German firm Berlin Brands Group, said it was looking to acquire UK-based ecommerce brands selling goods such as kitchen appliances, sports gear and gardening equipment that make between $1 million and $100 million a year in revenue.

Its founder and chief executive Peter Chaljawski said the group could help UK brands to scale, as it operated across multiple marketplaces in different markets. “Ecommerce goes far beyond Amazon,” he said. “[We are] active in 28 countries [and] also on 100-plus channels, Amazon being one of them. Brands that sell to [us], will benefit from new markets and new channels right away.”

He added: “While Amazon has high market shares in many parts of the world, the market is fragmented and diverse in many countries. We open up global markets to brands world wide.”