UK online SMEs confident despite economic headwinds
A wave of online small and medium-sized enterprise (SME) entrepreneurs are showing confidence in their future, despite wider economic pressures, a new report from eBay UK suggests.
The study found that nearly four in five, or 78 per cent, of online small businesses expect to see growth over the next 12 months, with a third feeling “very confident”.
The findings come as separate data from the British Retail Consortium (BRC) reveals that consumer confidence remains fragile, particularly among older generations.
Major retailers have also warned the government that rising costs and inflation are putting pressure on household spending.
A new entrepreneurship model
The eBay research highlights a shift in how new ventures are being built.
Many are launched with limited capital, with 44 per cent starting with less than £1,000 and three per cent with no capital at all.
For a growing number of people, these online businesses are not just side hustles but their main source of income, representing a shift toward more flexible, digital-first careers.
This confidence has been driven by factors such as strong consumer demand, 30 per cent, new selling tools and AI innovation, and increased support from online platforms, or 17 per cent.
One example of this is Rarewaves, a global retailer that started as a small vinyl store in 2005 and now has a $100m turnover.
The company credits its use of AI for managing millions of listings across various marketplaces.
AI as a growth engine
AI is increasingly viewed as a crucial tool for these businesses. The report found that 43 per cent are excited about its potential, while another 26 per cent are curious to explore it.
Among those already using AI, the biggest benefits are time-saving on admin and creating product listings.
Despite this optimism, significant challenges remain.
The top barriers to growth cited by sellers are the UK economic climate, time constraints, and access to funding.
This aligns with BRC warnings that rising food inflation, expected to hit six per cent, is making it difficult to improve consumer sentiment.
However, Eve Williams, general manager of eBay UK, remains optimistic about the future of this new entrepreneurial class. She noted that these businesses are “ambitious and adaptable,” and many are “already embracing tools like AI to scale smarter and grow faster.”
She added: “At eBay we’re proud to support their journey, lowering the barriers to entry, championing innovation, and helping sellers build businesses that are flexible, digital-first and designed for the future of work”.