News Article

Sector Analysis

Online-only retailers facing financial distress

By CreditMan Thursday, January 30, 2014

Recent research has revealed that the proportion of online retailers facing ‘significant’ financial problems is almost double that of all shopkeepers.

Interestingly, given that online retailing reached record levels in November 2013, according to the study the total number of retailers with financial problems has risen by 15% to 15,792. However, there has been a sharper rise in the number of online-only outlets struggling, up 28% year-on-year, from 1,421 to 1,861.

A total of 151 operators face ‘critical’ financial problems, an increase of 8% from the last quarter of 2012. The troubled businesses have more than £5,000 in outstanding county court judgments against them, or face winding-up petitions.

The problem has been exacerbated by an increase in the number of online start-ups, which are typically at higher risk of failure in the early stage of their life cycles.

These small concerns are also affected by the ‘giants’ such as Amazon. Because of their dominance, small web-only operators are struggling and in the recent survey showed a 28% increase in significant financial distress.

Source - Harris Lipman