UK Web Business Stock

Posted on January 15, 2008
Filed Under Uncategorized | | Written by Gary Reid

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I wrote the other day about some truths about starting a web business here in the UK and mentioned there was 360,000 web based businesses here in the UK. I also wrote the if you wanted to know how this was calculated get in touch.

Rather than keep emailing this out I have copied below the reasoning behind it, which is a section from something I published a couple of years ago, so it is 2 years out of date. Some of the web based sources have disappeared.

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According to the August 2005 Monthly Economic Bulletin (1) compiled by the Centre for Economics and Business Research (CEBR) over Â£4 billion of trading will be carried out on eBay UK alone, thatâ€™s 1.3% of total retail sales and the report highlights that 0.3% of retail sales growth can be attributed to eBay. The report indicates that over 55,000 people in the UK draw a regular/primary income from eBay.

A report compiled by ACNielsen (2)on behalf of eBay indicated that over 750,000 Americans draw their primary income from eBay, with another 1.5 million people supplementing their income with ebay sales.

Mastercard and Warillow International published a study on the ‘Web-Driven Entrepreneur’ (3) that estimated there are over 5 million web based businesses in the USA. This would account for 25% of the total small business stock.

No figures are publicly available for web based businesses in the UK. However we can generalize by using the figures available for the USA.

We know there are approximately 20 million small businesses in the USA and that 25% of them are web based. We could assume that this figure could be used to get the UK amount. However, this could be inaccurate due to the differing nature of web diffusion and enterprise culture in the two countries.

We do have figures for eBay traders for both the UK and USA. In the USA 750,000 eBay traders would make up 3.75% of total small businesses. In the UK 55,000 eBay traders would make up 1.375% of the 4 million small businesses.

As a percentage of total small businesses the UK has 63.4% fewer eBay traders as a proportion of total businesses than the USA.

If the UK had the same level, 3.75%, we would have 150,000 ebay traders.

If we use this differential to calculate the total number of UK businesses that are web based it would give us 9% or 360,000 businesses.

USA
units percentage
ebay traders 750000 units 3.75%
web businesses 5000000 units 25%
total 20000000

UK
units percentage
ebay traders 55000 units 1.375%
web businesses 360000Â units 9%
total 4000000

These figures only give an indication to the actual size of the web based business stock within the UK. My personal feeling is that this under estimates the amount.

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This section was never meant to give a definitive figure, but rather a flavour of the number and relies heavily on the propensity to use eBay as a sole source of income to create a differential because it is something figures are available for. Domain registrations were seen as a red herring and not used as a factor, the same goes for using SIC.

The second factor is that the figure relates to ‘individuals’ more than web based businesses, so 360,000 individuals, some of which may run two or more web based businesses.

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One Response to “UK Web Business Stock”

10 Truths About The UK Start-Up Scene : Kitchen 2.0 on January 15th, 2008 8:16 am

[…] web based businesses in the UK right now (ask me if you want details how this was calculated now here) - out of which 7 raised VC in the first half of 2007 - that equals about 0.002% got VC. That means […]

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