Stay ahead of the curve and future-proof your business with Mintel’s UK Online Retailing Market Report 2024. Our full report is packed with consumer-led market intelligence, the latest UK online retail market research, trends, and consumer behaviours affecting your business. Get a 360° view of the online sector, including package online retail market size, market share and forecasted growth to help you align your business strategy with the needs of your audience.
Below, we’ve handpicked the key insights analysed in the full report and summarised the core topics.
Key Topics Analysed in the Full Report
- The online retail market size, market segmentation by type of retailer and forecasts through to 2029.
- How consumer shopping behaviour is changing as the cost-of-living crisis begins to ease.
- Leading online retailer customer profiles, sales and online retail market share.
- Levels of engagement in online shopping and which retailers are the most popular.
- Use of credit, cashback and vouchers/deal products by online shoppers.
- The features and benefits of online shopping most valued by consumers.
- Key launches and innovations within the UK online market in the past year.
- Online retail market definitions: Mintel looks at all online sales, both from store-based retailers and those that only trade online.
Online Retail Market: Current Outlook
Although inflation has eased, many shoppers remain strapped for cash and are finding savvy ways to be financially resilient. The value credentials of the online channel will keep the channel relevant, but the challenge is to retain shoppers whose confidence is improving, by finding new ways to offer value.
- Online retail market size: Online sales grew by 5.3% in 2023 and are forecast to grow by 3.5% in 2024.
Online Retail Market: Opportunities and Challenges
Established online retailers in the UK are facing a growing challenge from international platforms, such as Temu, Shein and AliExpress, as well as the emerging force of social commerce platforms like TikTok Shop. Such platforms have significantly lowered the barriers to entry for international brands and products, intensifying the competitive pressures in the online retail market. In order to counter this threat, other retailers should look to highlight different aspects of their business, focusing on areas such as improving customer service and smoothing order processes through the use of AI tools and leveraging sustainability credentials such as local sourcing.
- Online retail market share: 25% of online shoppers have shopped at Temu in the last year and 22% at Shein.
Purchase our UK Online Retail Market Report to receive a five-year forecast, consumer behaviour analysis, and recommendations for opportunities in the online retail market. Readers of this report may also be interested in our UK Retail Rankings Market Report 2024, or our range of Retail Market Research.
Meet the Expert
Natalie is a senior analyst with over 25 years’ experience researching and writing reports for Mintel’s European retail market coverage. She now specializes in the French market.
As overseas marketplaces challenge the status quo, opportunities exist for differentiation through leveraging authenticity, innovative AI solutions and playing to sustainability concerns.
Natalie Macmillan
European Analyst – Retail
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Executive Summary
- Opportunities for the online retail sector
- Use AI to enhance the online proposition…
- …with early examples of integrations hinting at the future
- As concern around the environmental impact of buying online grows…
- …there is opportunity for domestic players to play into these concerns
- Leverage (and continue to build) brand trust…
- …and leverage customers to reinforce trust in the brand
- Market dynamics and outlook
- Market size & forecast
- Market predictions
- Market size and forecast
- Cost of living crisis casts a long shadow
- Online to reach 29% of retail sector sales by 2029
- Graph 1: online sales as a proportion of all retail sales, 2020-29
- A better performance from online-only sees store-based share of the market fall
- Graph 2: share of online sales, by type of retail operation, 2021-24
- Fashion is the largest sector, followed by grocery and electricals
- Graph 3: estimated breakdown of all online sales, by product category 2023
- What consumers want and why
- Online buying of most product categories has settled at above pre-pandemic levels
- Graph 4: products bought online in the last 12 months, 2019 and 2023
- Frequency of online shopping has fallen back after pandemic peaks
- Graph 5: frequency of online shopping, 2019, 2021 and 2024
- Online-only retailers maintain leading position
- Graph 6: types of online retailer shopped with in the last 12 months, 2019, 2021 and 2024
- Tesco and Shein make biggest overall gains in shopper numbers but Temu makes instant impact
- Graph 7: retailers shopped online with in the past year, 2023 and 2024
- Credit use has risen as cost of living pressures continue
- Graph 8: use and types of credit used to purchase products online, 2024
- Consumers moving away from cashback schemes
- Graph 9: cashback sites used when shopping online in the last 12 months, 2021 and 2024
- Instant gratification of voucher codes gains traction
- Graph 10: usage of vouchers and deals sites in the last 12 months, 2024
- Four main points of convenience favour online shopping
- Graph 11: convenience of shopping online for products compared to in-store, 2024
- Online shoppers wary of sharing too much with AI tools but younger shoppers are less resistant
- Graph 12: attitudes towards online shopping, 2024
- Retailer activity
- Amazon accounts for almost a third of online sales in the UK
- Graph 13: leading online retailers’ market shares, 2023
- Amazon’s excellence sets it apart
- Zara to pilot live shopping in the UK
- TikTok Shop expands to luxury and refurbished tech
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Market Dynamics
- Market size
- The post-COVID rebalancing of the market looks to be over
- Online spending is returning to growth
- Graph 14: market size for online retail sales (inc. VAT), 2019-2024
- …but rate of growth is slowing as inflation eases
- Graph 15: annual % change in total online retail sales, 2022-24
- Seasonal trends returning to the online sector
- Graph 16: online sales as a percentage of all retail sales, by month, 2022-24
- Market forecast
- Online sales forecast to grow 4.3% in 2025
- Diverging financial recoveries will hold back growth over the next few years
- The channel will benefit from investment, new technologies and business models
- Online to reach 29% of retail sector sales by 2029
- Graph 17: online sales as a proportion of all retail sales, 2020-29
- Market segmentation
- Segmenting the online market
- A better performance from online-only sees store-based share of the market fall
- Graph 18: share of online sales, by type of retail operation, 2021-24
- Return to stores has boosted share of pure-players
- Graph 19: all online sales, by broad type of retailer, 2019-23
- Legacy boost from the pandemic has accelerated penetration of online in many categories
- Graph 20: online sales as a percentage of store-based retailers’ sales, by sector, percentage-point change, 2023 vs 2019
- Fashion is the largest online sector
- Fashion is the largest sector, followed by Grocery and Electricals
- Graph 21: estimated breakdown of all online sales, by product category, 2023
- 2023 growth broadly reflects the wider markets
- BPC shows strongest online growth in 2023
- Macro-economic factors
- Economic output has stagnated since the cost of living crisis began
- Graph 22: GDP, 2021-23
- Falling inflation has reduced pressure on household finances
- Graph 23: CPI inflation rate, 2021-24
- Food and drink prices still top the list of consumer concerns
- Graph 24: cost of living related issues noticed in the last two months, 2024
- Interest rates expected to fall in 2024, but borrowing pressures will remain
- Perceptions of the cost of living crisis
- Graph 25: perception of the state of the cost of living crisis in the UK, 2024
- Squeeze on luxuries and non-essential items to continue
- Graph 26: “Are you expecting to do any of the following as a result of rising prices? Please select all that apply.”, 2024
- Consumer sentiment: wellbeing is up but the recovery has slowed
- Graph 27: the financial wellbeing index, 2016-24
- Consumer confidence continues to trend upwards
- Graph 28: the financial confidence index, 2016-24
- Social, environmental and legal factors
- AI divides opinion but younger millennials are positive about it
- Graph 29: attitudes to online life – “I think AI will have a positive impact on my life”, 2024
- New government may lead to rates shake-up amid improvement in consumer sentiment
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What Consumers Want and Why
- Products bought online
- Online shopping is near-universal
- Over nine-in-ten shop online
- Graph 30: any online shopping done in the last 12 months, by household income, 2024
- Online buying of most product categories has settled at above pre-pandemic levels
- Graph 31: products bought online in the last 12 months, 2019-23
- The winners: grocery and beauty
- Graph 32: percentage-point change in buying online in the last 12 months by product category, 2019-24
- The losers: furniture and leisure goods
- Online shopping booms among females in three areas
- Graph 33: percentage-point change in online purchasing of different products in the last 12 months, by gender, 2019-24
- DIY/garden retailers move to increase appeal of online content to women
- Young females drive surge in online jewellery/watch buying
- Most people buy fewer than four types of product online
- Graph 34: repertoire of product categories purchased online in the last 12 months, by household income, 2024
- Frequency of online shopping
- Frequency of online shopping has fallen back after pandemic peak
- Frequency of online shopping has fallen back after pandemic peaks
- Graph 35: frequency of online shopping, 2019-24
- Age and presence of children are key drivers of more frequent online shopping
- Income is also an important driver of purchase frequency
- Location is a big influence
- Location, location, location
- Retailers shopped with online
- Online-only retailers maintain leading position
- Graph 36: types of online retailer shopped with in the last 12 months, 2019-24
- The rise of Temu and Shein
- Graph 37: online-only retailers shopped with in the last year, 2019-24
- Several online fashion specialists have seen their shares decline
- Graph 38: percentage-point change in online-only retailers shopped with in the last year, 2019-24
- Amazon and eBay benefit from broad appeal
- Temu and Shein audience is more focused
- One in five from higher earning households shop from five or more online-only retailers
- Graph 39: repertoire of retailers without stores shopped with online in the last 12 months, by household income, 2024
- Status quo largely maintained among store-based retailers
- Graph 40: store-based retailers shopped with online in the last 12 months, 2019-24
- The winners and losers
- Graph 41: percentage-point change in shopping online with store-based retailers in the last 12 months, 2019-24
- Argos derives strength from broad appeal
- M&S online shoppers still older than average but signs of progress
- Online grocers appeal to different audiences
- Higher-earning households shop the highest numbers of retailers
- Graph 42: repertoire of retailers with physical stores shopped with online in the last 12 months, by household income, 2024
- Tesco, Sainsbury’s and Shein make biggest overall gains
- Graph 43: retailers shopped online with in the past year, 2023 and 2024
- Credit, cashback and voucher use for online purchases
- Credit use has risen as cost of living pressures continue
- Graph 44: use and types of credit used to purchase products online, 2021-24
- Use of credit for online purchases appears to have plateaued
- Older online shoppers most likely to use credit cards to pay
- Graph 45: consumers using a personal credit card to pay for online shopping, by age, 2024
- PayPal Credit and Klarna are tapping into youth demand
- Consumers moving away from cashback schemes
- Graph 46: cashback sites used when shopping online in the last 12 months, 2021-24
- All major cashback brands have seen a decline
- Graph 47: percentage point change in usage of cashback brands in the past 12 months, 2021-24
- ‘Money for nothing’ concept attracts family online shoppers
- Instant gratification of voucher codes gains traction
- Graph 48: usage of vouchers and deals sites in the last 12 months, 2024
- Vouchers appeal peaks among younger men
- The era of the Savvy Shopper
- Savvy behaviours among online shoppers
- Online shopping versus shopping in-store
- More than just value driving shoppers to the channel
- Four main points of convenience favour online shopping
- Graph 49: convenience of shopping online for products compared to in-store, 2024
- Give online shoppers the tools they need to browse more efficiently
- Provide clear product information for transparency
- Tackle friction point of returns
- Provide the means to check quality
- Continue to reassure on authenticity of luxury goods
- Improve online advice
- Attitudes towards online shopping
- Give busy online shoppers tools to make their lives easier
- Graph 50: attitudes towards time and online shopping, 2024
- Younger parents most likely to value flexible delivery
- Use sustainability and product miles to differentiate
- Graph 51: attitudes towards sustainability and size of companies shopped with online, 2024
- Capitalise on feelings of guilt around shopping with Amazon and other large retailers
- Exploit concerns around overseas sourcing
- Graph 52: attitudes towards buying online from overseas companies and impact of gamified promotions, 2024
- Use gamification to draw in online shoppers and men in particular
- Some consumers wary of sharing personal information with AI tools
- Graph 53: attitudes towards use of Artificial Intelligence (AI) in online retailing, 2024
- Build AI functionality into search options
- Refine reviews to allow speedier decision-making
- Graph 54: attitudes towards reviews in online retailing, 2024
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Retailer Activity
- Leading Online Retailers and Market Shares
- Amazon continues to dominate
- eBay sales decline after pandemic boost
- Online fashion retailers seeing sales fall
- Ocado Retail up 7% in 2023 and cutting losses
- Very receives investment and partners with Amazon for AI services
- Frasers Group continues expansion of its online business
- M&S grows online through partnerships
- Amazon accounts for almost a third of online sales in the UK
- Graph 55: leading online retailers’ market shares, 2023
- Online retailers: market shares
- Online retailers: revenues
- Launch activity and innovation
- Shein battles negative press ahead of possible UK IPO
- Zara to pilot live shopping in the UK
- TikTok Shop expanding appeal to a broader audience, with a luxury category……
- …and refurbished tech
- Resale initiatives garner publicity
- Amazon hosts pre-owned luxury reseller
- Rentals in fashion and fitness
- Click-and-collect and rapid-delivery options expanding
- Amazon is launching ultra-fast drone deliveries in the UK
- Retailers look to harness AI for personalised services…
- …for gamification…
- and to enhance the shopping experience
- Amazon introduces Consult-a-Friend
- Advertising and marketing activity
- Above-the-line advertising spend up 9% in 2023
- Graph 56: total above-the line, online display and direct mail advertising expenditure by online retailers, 2020-23
- Digital dominates above-the-line spending
- Graph 57: total above-the line, online display and direct mail advertising expenditure by online retailers, by media type, 2022-23
- Amazon is the largest spender
- Graph 58: total above-the line, online display and direct mail advertising expenditure by online retailers 2022-23
- Amazon focuses on added benefits of Prime on TV…
- …and in posters
- eBay highlights sustainability credentials
- AO.com plays on fears around impact of appliance dumping
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Brand Research
- Amazon scores highly on trust and differentiation
- Amazon leads on experience
- Trust and great service underpin Amazon’s dominance
- Shein and Temu most likely to be seen as unethical
- Amazon, Shein and Temu seen as most profit-oriented
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Appendix
- Supplementary data
- Advertising by media type
- Market forecast data and methodology
- All online sales: market size and forecast
- All online retail sales: market forecast prediction intervals
- Online retail sales by sector – value
- Online sales as a proportion of sector sales
- Report scope and definitions
- Market definition
- Data Sources
- Abbreviations and terms
- Methodology
- Forecast methodology
- Consumer research methodology
- Nielsen Ad Intel coverage
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