A Guide to Selling Products Online in the UK

Ryan Patrick

• 12 min read
A Guide to Selling Products Online in the UK

The United Kingdom's ecommerce market is the fourth in the world, making it RIPE for selling products online. Launching an online business is simple and fast if you have the right idea or service.

With such a vibrant market for ecommerce stores, there are many platforms to facilitate your idea. However, you must also comply with UK legal requirements to sell online.

Online trading is a great way to earn extra revenue or to venture into a new world of entrepreneurship. Selling online involves assessing business requirements, choosing a preferred platform, and scaling it to your needs.

The UK population is tech-savvy and is comfortable purchasing online and using digital payment options. Some popular online retail segments include personal care products and electronics. In this blog post, Incorpuk presents a step-by-step guide on selling products online in the UK.

Before launching an online store in the UK, you must lay down a legal framework to ensure your online venture complies with the law. As a result of Brexit, new Value Added Tax (VAT) and customs regulations were introduced. Online sellers must adhere to these regulations before selling online. These legal requirements include:

1. Registering for VAT

Whether you are a UK citizen looking to start an online venture or an outsider wanting to branch into the country, you must be aware of VAT.

VAT is an ecommerce tax based on consumption and imported goods.

It includes a standard rate of 20% applicable on most products, a 5% reduction rate on health products, and children's car seats. All food products have a 0% tax rate, including books and children's clothing.

You can apply for business VAT online, and once it goes through, your business can start to charge and reclaim VAT.

2. Understand Currency Exchange Rates

Selling online opens doors for local and international buyers. Hence, understanding currency exchange rates is crucial, especially when trading across borders. Dealing with customers from different countries means product prices can go up or down depending on the country's UK currency rates.

Bank charges, currency fluctuations, and currency transactions can influence product prices. Therefore, you should price your products based on the shopper's currency to ensure a consistent customer experience.

3. Choose a Preferred Payment Method

There are many payment methods that customers can use to pay for goods online in the UK:

  • Debit card
  • Credit card
  • Wire transfer
  • Direct debit
  • Digital wallets are also an upcoming payment method for online goods, contributing a third of the payments.

As you set up shop, ensure that you provide the preferred payment methods to help shoppers quickly pay without losing money or encountering inconveniences.

Compliance and Regulations

To ensure you're on the right side of the UK laws, your business must comply with these regulations:

  1. The Electronic Commerce Regulations 2002 - Ensure your business details are in order:
  • Business name and address
  • VAT number
  • Company registration number
  • T&Cs, marketing offers
  • Direct contact information
  • Prices
  • Tax and delivery charges on your ecommerce website

2. Data Protection Act 1998—Register with the Information Commissioner's Officer (ICO) to gather personal data only in relation to your business needs. You must ensure the data you collect is appropriately stored. Whenever individuals request that you remove their personal data, you must respect that and mention in the T&Cs how and what you use the data for.

3. Consumer Protection (Distance Selling) Regulations 2000 - Before customers purchase a product, ensure you provide sufficient information like:

  • Postage and packaging fee (where applicable)
  • VAT in the price
  • Return or cancellation timeframe of their order

4. Privacy and Electronic Communications (EC Directive) Regulations 2003—Inform shoppers about using website cookies in a private manner, give them a choice to accept or decline them, and tell them how to turn them off.

Simple Steps to Start Selling Products Online in the UK

Selling products online has unlimited potential since you can sell to anyone anywhere. However, if you dream of growing a profitable business online, you will need to put in some work to make it happen.

You must find the right idea for your online business, register for business VAT, and create a website. To dig deeper into the topic of online selling of products in the UK, here are some steps to guide you in the new business venture:

1. Find a Suitable Niche

Ecommerce stores are on the rise, and you need a unique idea that sets your business above the competition. You're interested in a suitable niche and in high demand so that you can sell it at a reasonable price. How do you determine a product in demand?

  • Research your competition - Find out who your competitors and target audience are. How do you find them? Do competitive research, then look at their marketing strategy, audience, and price points. Through the insights you get on their sites, use them to inspire your ecommerce business.
  • Evaluate your idea—Getting a business idea and sticking with it may be the hardest part. However, you can filter through several ideas and settle for the one that most favours you. Before starting your business, the idea of what you want to sell online must be clear.
  • Write a business plan - Now that you know what you'll be selling and your competition, create a business plan. A business plan is a document that summarises your business, its mission, competitive analysis, and marketing strategy.

2. Know Your Target Audience

Your target audience is the person you sell to online and you can find them through surveys and competitor analysis in these ways:

  • Run customer surveys - Customer surveys are the doorway to your ideal customer. Run quizzes and 101 usability tests, and get group feedback to help you determine what your target audience needs.
  • Assess a competitor's audience - Once your business goes live, you may have to woo your competitor's audience. How do you make them buy from you? Use competitive analysis to uncover the customer persona they use to sell and market to. Get a unique angle that will set you apart from the crowd.
  • Build buyer personas - Buyer personas detail your customer. When creating them, include buyer pain points, hobbies, interests, job titles and demographics. To ensure you're referring to the right people you're targeting, refer to your buyer personas in your marketing campaigns.

3. Choose the Exact Product to Sell

Since you're clear on your niche idea and target audience, it's time to narrow down to the exact product you'll be selling. Will you connect with a manufacturer for the product or go private?

You can launch a product line if both paths are different from your thing. Remember that your product choice will play a significant role in the success of your ecommerce store.

  • Identify an in-demand product - A commodity in demand is more accessible to sell because you'll find a ready market; customers will be looking for it. Selling an in-demand product ensures you don't waste time promoting products people don't need.
  • Price your products - When you buy products at a cheaper price and then sell them at a high price, your profit margins are high. However, consider your local and international customers as you set your product prices. Prices will significantly impact your customer base. How do you avoid scaring potential customers? Price your products by researching and analysing competitors to ensure you're on the right path.

4. Create Your Online Store

An online store is where you'll connect with shoppers who want to purchase your products from the Internet using a mobile app or a web browser. An online store is ideal for a beginner on a tight budget who wants to join the online selling community. An online store will help you validate your product idea before you dedicate your resources to an ecommerce store.

You can sell your products using many established online sales platforms, but you need one with an entry-level plan. Some are dedicated to specific products, while others are generalist platforms hosting a wide range of products.

Before settling for a single platform, research widely to discover which favours your product of choice. You should also consider reading the terms of selling on the platform to ensure they're favourable to your business.

Online selling platforms give you access to a pool of customers but charge a commission on every product you sell. Thus, selling on established platforms is ideal for people starting an online business for the first time.

These are the steps to follow:

  • 1. Create essential pages—With a domain name, you start to build pages like the About page, contact page, FAQ, and contact page. People trust you with their money, so you must have these pages ready before selling. Besides impressing buyers, they exude authenticity, increasing customers' confidence.
  • Optimise the checkout process—Most buyers abandon their carts at checkout for different reasons. Thus, you should research and solve these reasons to ensure checkout optimisation.
  • Manage inventory—Get inventory management software to ensure you never stock out. If customers miss whatever they want on your page, they'll drive to your competitors.

5. Select a Selling Platform or Channel

A selling channel is an online platform where you'll parade your products for sale. Here are the popular online channels in the UK you can use:

  • An online store - owning a website is a direct way for shoppers to purchase your product, and you'll enjoy high-profit margins. HOW? On your website, you make direct sales by eliminating any middlemen who might take a cut from your business. You also get to collect data you can analyse to know your customers better and deepen your relationship. As a result, you get to know who is buying, when, what, and when the order comes through in your online store.
  • Online marketplaces - An online marketplace is like a kiosk in a mall. Besides your direct selling channels, you gain exposure to new audiences. These platforms include:
  • Amazon is the most visited online marketplace in the UK, exposing sellers to millions of buyers.
  • Wayfair is an ideal platform for selling furniture and homeware. Although its origin is in the US, UK residents love it. Sellers love the platform because it doesn't take a cut for items sold.
  • Etsy - Etsy is a good place for small businesses to sell homemade goods.
  • eBay—A quarter of eBay's clientele comes from the UK, and you can sell on the platform on different platforms.
  • ASOS - ASOS was founded in the UK and is the right place for sellers of vintage or original fashion items. The platform is popular with young adults in their twenties.
  • Social ecommerce - social media users buy products from their favourite platforms like FaceBook, Instagram, Pinterest, and TikTok.
  • B2B or wholesale: Wholesale is where you sell goods to retailers in bulk at a lower price. You increase sales and enter your products into new markets at lower risks.

6. Set Up a Payment and Shipping Method

Get a payment processor to receive your money after a sale online. The software moves your money from your customer's account to your merchant's. The software encrypts data and keeps it secure. The most popular payment methods in the UK include:

  • Debit card
  • Credit card
  • Digital wallet

The modern shopper demands free shipping services. Be clear on the delivery method to ensure your customer doesn't abandon their cat at checkout. Inform them if it's free or paid to avoid inconveniences. Here are the different delivery methods:

  • Domestic shipping - shipping to local customers is cheaper than across borders. Thus, you should evaluate different shipping zones, packaging materials, and couriers and include the fee in your pricing to improve customer satisfaction.
  • International shipping—Shipping parcels to buyers across borders requires strategy. Ensure you know the country, its shipping regulations, and the costs associated with your buyer getting the product.
  • Omnichannel fulfilment - ecommerce fulfilment involves picking, packing, and shipping your customer orders. You can do this in-house, work with a dropshipping supplier, or hire a logistics partner.

7. Market Your Products and Keep Improving

Spread the word about your online business venture on different platforms, such as social media channels, and run paid advertisements. These two strategies will help market your online store and reach your target audience and other potential buyers.

An entrepreneur's mind endeavours to improve their services as the business grows. To remain competitive, keep improving back-end operations to ensure better service delivery. You can do this by:

  • Automating time-consuming tasks frees time for other high-impacting activities like business growth.
  • Experiment with in-person commerce, like attending events that resonate with your business.

Why You Should Sell Products Online?

If your business has been operating in a brick-and-mortar store, it may feel weird trying to transfer it online. However, it's advantageous to consider doing so since we are in a digital age.

Ideally, with a well-defined product, selling online can be a success with little human involvement. With good planning, products have a fixed price and are delivered to the buyer within a specified period without fail. With that in mind, any business can operate online and enjoy these benefits.

Cut Overhead Costs by Selling Online

Selling products online will reduce operational and setup costs. Setting up an online store is easy and costs less: there's no renting and staffing like in a traditional brick-and-mortar store.

You'll also be able to slash your processing costs because any primary e-commerce store can automatically produce and catalogue customer orders.

Selling products online will also help you drastically expand your company's global reach and boost sales because consumers from any time zone can explore your products and make a purchase 24 hours a day.

On top of all that, setting up an online shop or utilising an existing external partner to sell your goods can be incredibly affordable. Here are other advantages:

  • Increased flexibility in business
  • Earn a passive income
  • Reach more customers
  • Fast business growth

How to Integrate eCommerce Services into Your Website

Adding shop functionalities to your website is a great way to increase sales, among other benefits. The process is easy, and here's how to make it happen:

1. Online Selling Platforms

Some online selling platforms offer affordable ecommerce packages. They allow sellers to create a primary online shop that's easy to customise. Follow this process:

  • Register your business details on your platform of choice
  • Select your theme
  • Start uploading product details

Since many dynamic online selling platforms exist, exploring them before setting up a shop is worth exploring. Each platform has a unique selling point; switching from one to another is straightforward. Regardless of the platform you choose to sell your products online, there are several must-haves, and they include:

  • Catalogue management
  • Order processing capabilities
  • Payment Security

2. Use Plugins

Integrating a new online store with an existing website is much easier, as many plugins offer advanced WordPress services.

WordPress is the largest and most widely hosted by many website owners because it's user-friendly. It's ideal for people with little IT knowledge and also for users who intend to invite multiple people to the company's website.

If your website is hosted on WordPress and you want to sell products online, download a plugin like WooCommerce. The plugin adds new functions to your website, allowing you to sell online.

Companies that integrate WooCommerce can sell digital and physical products. The software also supports affiliate products, meaning you can leverage your existing relationships with other businesses.

Laws You Must Be Aware of When Selling Products Online

Like the typical customer in the UK, the government provides the same protection to people who buy goods and services online. Most measures for selling online are basic common sense, but you must choose a hosting service or website template that complies with the provided rules.

For instance, the UK government dictates that whenever a customer orders, the seller must clarify that they have to pay at this point. You must also outline the payment process, delivery options, and costs.

  1. Provide the order process—List the step-by-step process a buyer must follow when placing an order. Ensure customers can make corrections to an order after submission.
  2. T&Cs - Your online business must include a valid terms and conditions page accessible to all customers. Include a valid email address and registered business VAT, and indicate the cost of calling your business. Remember to include a description of the goods or services you're selling.
  3. Total price - The prices of your products must be transparent, including the total delivery cost. In short, there should be no hidden costs the buyer will encounter after placing an order.
  4. Cancellations - Although you may not like it, customers have the legal right to cancel a purchase within 14 days. Whenever there is a cancellation, the law obliges you to inform customers about the cancellation window, and they don't have to explain themselves to you.
  5. If you fail to tell your customers about the right to cancel an order, they can still do so anytime in the coming 12 months. However, if you tell them within 12 months, they have a 14-day window to cancel from the day you tell them.

After an Order is Placed

Once a customer places an order in your online shop, the following must happen:

  • As you deliver the order, it must be accompanied by a receipt or invoice.
  • The delivery of ordered goods must be within 30 days unless there's a different agreement in place.

Whenever there's a dispute with a customer over your company's compliance with the online selling rules, don't fret. The UK Government recognises multiple exceptions to them. Find an entire guide on online and distance selling regulations on GOV.UK.

For non-UK residents or companies that trade in affiliation with overseas businesses, check the online selling rules in your jurisdiction. Understanding these rules and regulations ensures compliance with regulatory frameworks in the home country.

Incorporate Your Company with Incorpuk Today

At Incorpuk, we will help you file accurate information when you register your company through us. We will help you with incorporation articles, a registered office address, and all you may need to register your company in the UK. Contact our team if you seek any information; we will gladly assist.

Frequently Asked Questions

Clothing is the most sold product online in the UK. A large percentage of online shoppers buy their clothes via the Internet.

What are the business licence requirements for online businesses online?

In the UK, most online businesses can trade without a business licence. However, your online business must be appropriately registered with HMRC.

How to sell products online in the UK?

Companies can sell products without creating an online store using third-party sites like online marketplaces. These platforms include eBay, Wayfair, Amazon, and Etsy for products. As for services, Fiverr is the ideal site.

In Summary

Selling products online in the UK means observing a wide range of rules and regulations to make your business successful. Besides adhering to laws and regulations, selling products online is easy, and you don't have to be tech-savvy. The UK population is well-versed with online shopping, meaning online sellers have a ready market.

If you have an existing website, it's easy to integrate ecommerce plugins or a hosting platform for a marketplace within no time and set up shop online. Alternatively, you can use websites with a substantial following to create your online store and begin selling.

However, before selling products online in the UK, do your homework to find the ideal platform to set up a shop. Kindly contact our Incopuk expert here if you have any questions about selling a product online in the UK.