Nearly half of ecommerce entrepreneurs say growing competition in online marketplaces is costing them customers, according to new research from The Accountancy Partnership.
The survey of freelancers and self-employed professionals found that nearly half of ecommerce entrepreneurs (45.3%) say market saturation is one of the most common reasons they’re losing clients, highlighting the increasing difficulty of standing out in crowded online marketplaces.
The findings suggest that while ecommerce has lowered the barrier to starting a business, it has also created a highly competitive environment where small sellers must constantly fight for visibility.
Key findings from ecommerce entrepreneurs
- Nearly half of ecommerce entrepreneurs (45.3%) say market saturation is costing them customers
- Over a third (34.4%) say platform fees or algorithm changes have negatively affected their business
- Nearly one in four ecommerce entrepreneurs (23.4%) say tax administration has negatively impacted their business
- Over half of respondents (54.7%) report increased stress as a result of industry pressures
- Three quarters of online sellers (75%) say they feel secure about their financial future
- More than half (54.7%) believe artificial intelligence will have a positive impact on their industry
Research suggests that algorithm-driven ranking systems can significantly influence which sellers are visible to customers, sometimes limiting competition or making it harder for smaller businesses to reach buyers.
In recent years, digital marketplaces such as Vinted, eBay, Amazon, and Etsy have been required to report seller earnings to HM Revenue & Customs under new international reporting rules. These requirements mean platforms may share seller income data with tax authorities if certain thresholds are met.
Under current rules, sellers may need to report income through Self Assessment if they exceed the £1,000 trading allowance, even if they are operating small side businesses or selling through digital platforms.
Lee Murphy, managing director of ecommerce accountancy experts, The Accountancy Partnership, said this increased oversight reflects the rapid growth of the online selling economy.
“Online marketplaces have created huge opportunities for entrepreneurs, but they also bring new compliance responsibilities. Many people start selling online as a side project and may not realise that once income reaches certain thresholds, it can fall within the scope of business taxation.”
The survey also suggests the pressures of running an ecommerce business are taking a toll on entrepreneurs’ wellbeing.
More than half of respondents (54.7%) say they have experienced increased stress or anxiety, reflecting the financial and operational pressures associated with managing an online business.
Despite these pressures, many ecommerce entrepreneurs remain optimistic about the future.
The survey found that nearly two thirds of ecommerce entrepreneurs (64%) are confident they will match or exceed last year’s profits this year.
Meanwhile, over half believe artificial intelligence will have a positive impact on their industry, suggesting that new technologies may help smaller businesses compete more effectively online.
As the ecommerce boom continues, small online sellers are increasingly navigating a crowded marketplace where platform visibility, fees and tax compliance can all shape whether a business succeeds.
