Covid pandemic fuels e-commerce start-up boom as shoppers shift online, Royal Mail reports

Tue 20 Oct 2020
Posted by: Noelle McElhatton
Trade News


A new study by Royal Mail suggests the UK is witnessing a boom in ecommerce start-ups encouraged by changing consumer behaviour during the Covid-19 pandemic.

Nearly 16,000 e-commerce businesses were created between March and July 2020 – more than double the 6,700 incorporations in the e-commerce businesses category in 2019.

In total, April to June saw a record number of 176,000 business start-ups recorded, the highest for any second quarter and exceeding the previous record high set in 2016.

Unique time

Royal Mail suggests that the unique circumstances of the pandemic and the lockdown have prompted the spike, with entrepreneurs adapting to a resulting increase in home shopping in particular.

During the first five months of the year, Royal Mail reported a substantial shift in its business from letters to parcels, with a 34% increase in parcel volumes.

This represents 177 million more parcels being delivered year-on-year for the five-month period ending 31 August 2020. Royal Mail revenues in the sector increased by a third.

Changing business models

Royal Mail has also noted that 71% of British companies have changed their business models to meet the rapidly changing behaviour of consumers during the coronavirus pandemic.

Of those who have made changes to their business model, more than half believe these will be for the long term.

The most common changes that business leaders anticipate will be made permanent include selling more products or services online (41% of those who have introduced this measure); new online customer service options (39%), and additional delivery services (31%).

Processing investment

Royal Mail is buying four new fully-automated parcel sorting machines to speed up the processing of parcels in its mail centres. This will expand its processing capacity by around 180,000 parcels per day.

The company has also introduced around 1,400 parcel post boxes across the country to adapt to changing purchasing habits.