ASOS, Boohoo, Gymshark and THG are among the founder members of a new business association designed to champion the UK e-commerce sector and support the efforts of physical retailers in their transition to a digital-first model.
Also forming part of the UK Digital Digital Business Association are AO World and Ocado, which was been set up by Boohoo and THG non-executive director Iain McDonald.
Appearing on Sky News today, McDonald said that the members of the new association are set to create 10,000 jobs in the UK this year and invest £1bn.
“By and large these are also highly paid and highly skilled jobs,” McDonald told the broadcaster adding that the e-commerce market could help support the “levelling up” of the UK economy with Gymshark creating jobs in the Midlands, Boohoo and THG based in Manchester and ASOS basing its warehouse in Barnsley, for instance.
While the news headlines in retail have been dominated by physical store closures and the buying up of traditional physical retailers by online players, McDonald said it was important to highlight the positive contribution that etailers make to the economy.
“We formed this organisation in the first place to cast a light on what is a very good news story for the UK economy and that is the growth of the online sector. The online sector has been contributing very positively to the UK economy for well over a decade now.
“It’s important to distinguish what we do from the US tech giants; there’s been a lot of disquiet about the fact that they’re not paying their fair share of corporation tax for example. All of our members of the UKDBA are proudly British and pay their taxes in the normal way,” he added.
McDonald conceded that the creation of 10,000 jobs did not come near to replacing the tens of thousands of jobs lost from the collapse of companies such as Arcadia and Debenhams, which employed 25,000 staff between them.
Arcadia’s brands were split between ASOS, Boohoo and City Chic Collective, while Debenhams went to Boohoo. No physical retail stores were saved in the deals.
McDonald added however that the jobs being created by e-commerce were well paid roles in the fields of technology, data and cyber security, for instance.
He also said that the demise of some big-name physical retailers could be tracked further back than the emergence of etail. “It’s a very complicated picture and if you look at the problems of the high street I think that it pre-dates the online sector and in fact you really need to go back to the growth of out of town retailing and food-based superstores in out of town parks,” he said.
In a statement marking the launch of the UKDBA, McDonald went on to say: “Our membership has helped underpin the UK as the most advanced e-commerce market in Europe.
“The British online industry is one of the UK’s greatest success stories and the UKDBA is here to champion our members, their customers’ interests, providing them a voice in a rapidly evolving world.
“With the face of e-commerce reshaped, UKDBA members will be crucial in driving the UK’s economic recovery from Covid-19 putting customers at the heart of their ambitions, whilst supporting the current government’s efforts to create a technology driven global facing economy.”
The creation of the UKDBA comes amid a growing debate about whether etailers should be subject to a digital sales tax to level up the playing field with physical retailers, who bear an unfair burden when it comes to business rates.
Treasury officials are reported to be hosting secret meetings this week with business leaders on how an online sales tax could work. Tesco has led the call for an online sales tax of 1% saying that its introduction could lead to a 20% reduction in business rates.
Next chief, Lord Simon Wolfson, has suggested higher rates for warehouses from where online retailers fulfil their orders, along with a 35% reduction in business rates for physical retailers.
Wolfson is one of a number of retailers to speak out against an online sales tax, which many fear would just be passed on the consumer or simply add more cost to businesses who trade both on- and off-line.