How To Start an Online Clothing Business in the UK

by Temiloluwa Alagbe
215 views 6 minutes read
A clothing store open for business

The clothing business in the UK can be both exciting and profitable. The United Kingdom’s strong economy and access to the international market make it easy to be a business owner, and the clothing business provides an outlet to showcase your creative side. Deciding to start a clothing business in the UK proves that you are business-savvy. Because we are confident in your ability to make smart business decisions, we will guide you down the path of business success. Armed with our highly informative article and your excellent decision-making skills, you will be an unstoppable force. Let’s begin.

Overview of The UK Economy

The United Kingdom has one of the largest economies in the world. The country’s GDP of $3.1 trillion constitutes 2.3% of the world’s economy, thus, earning the title of the sixth largest economy in the world. According to the OECD, the GDP of the UK is projected to grow by 0.3% in 2023 and increase by 1.0% in 2024. The UK’s currency (pound sterling) is also one of the strongest currencies in the world and the country has a high international trading power. This proves that the UK’s economy is a very stable one, making the United Kingdom an excellent place to start a business.

Overview of The Clothing Industry in The UK

The clothing sector is one of the largest sectors in the UK economy. Contributing to major innovations on a global scale, the UK’s textile industry is also one of the largest worldwide. The industry employs over 500,000 people and is responsible for a large part of the country’s GDP. The clothing industry in the UK is well-known for its wide range of textile products and its highly skilled workforce.

Why Start an Online Clothing Business in the UK?

In addition to the large textile industry in the UK, there are many other advantages of starting an online clothing business in the UK. Some of them include:

  • Strong e-commerce sector.
  • Access to international markets.
  • Excellent postal service.
  • Strong consumer protection framework.
  • Relatively stable economy.

Best Places to Start an Online Clothing Business in The UK

1. Manchester

Manchester is known for its thriving e-commerce sector. Because of the city’s high population of fashion-conscious citizens, there is a high demand for textile products. The government also offers grant programmes to support the growth of the textile industry in the city. Some of these grants include:

i) The Fashion and Textile Growth Fund

The fashion and textile growth fund is run by the British Fashion Council. The funding programme provides up to £30,000 to businesses that meet the requirements. It aims to support clothing businesses that are ready for growth. You need to have a turnover of between £250,000 and £50 million and a solid growth plan to qualify for this programme.

ii) The Manchester City Council Business Growth Fund

This funding programme aims to grow the economy of Manchester by supporting businesses. This fund provides £50,000 for businesses that have a solid job creation plan and a turnover of £25,000 – £250,000. This funding programme is run by Manchester City Council.

iii) The Start-up Loans Scheme

This is a loan programme with a fixed interest rate. This programme provides loans of up to £25,000 and was established by the UK government. The objective of this loan programme is to help start-up businesses grow. To qualify for this loan programme, you need to have an excellent business plan that demonstrates that you can repay the loan.

Businesses like Boohoo and ASOS are proof that you can build a successful online clothing business in Manchester.

2. London

London is home to a diverse number of people. For this reason, the city has the potential to give your business a large customer base. London also has a reputation of being a tech-savvy country and as such, more people will welcome the idea of shopping online. Because the London government is interested in the city’s economic growth, there are few grant programmes available to business owners in London.

i) The Fashion and Textile Institute Future Fund

This grant programme provides grants of up to £10,000 to businesses that have great potential and are innovative and sustainable. Because of this, your business needs to show enough potential and be innovative to meet the requirements for this grant programme. You also need to be a registered business owner with a turnover of less than £1,000,000.

ii) The Fashion Retail Academy Retail-Ready Programme

This is a funding programme available to businesses that are ready to improve their retail presence. This programme is organised by the Fashion Retail Academy. In order to achieve their goal of helping businesses grow, the programme provides funds of up to £5,000 to businesses. Of course, they would have to put some eligibility criteria in place to ensure deserving businesses receive the grant. These eligibility criteria include owning a registered business, a strong business plan, and a turnover of less than £5,000,000.

iii) Start-up Loans Company

This company provides loans of up to £25,000 to start-up businesses with a 6% interest rate. In order to qualify for this loan, you need a solid business plan, an obvious understanding of your target market dynamics, and to demonstrate your ability to repay the loan.

London is also the home to successful online clothing businesses like Net-a-Porter and ASOS.

3. Birmingham

Birmingham has a growing fashion industry and is a relatively affordable city. In addition to being an affordable city, Birmingham also has a strong e-commerce sector. As a result of this, it is an excellent place to start an online clothing business. There are also some grants available to business owners in the city.

i) West Midlands SME Grant Programme

This programme is funded by the UK Shared Prosperity Fund with the aim of funding small and medium enterprises (SMEs) in the West Midlands region. It provides grants of between £2,500 and £100,000 to registered businesses that have been in trade for at least twelve months, are not beneficiaries of other funding programmes, and with a turnover of less than £50,000,000.

ii) Business Growth Programme

Birmingham City Council funds the business growth programme. In order to help businesses grow, the programme provides grants of up to £10,000 to businesses. To qualify for this grant, you need to be a registered business owner who has been in the trade for at least a year, a solid business plan that demonstrates how useful the grant would be, and a turnover of less than £50,000,000.

iii) Net Zero Programme

The UK Shared Prosperity Funds also funds this programme. The objective of this funding programme is to help businesses improve energy proficiency. Therefore, the fund’s focus is on energy production. The Net Zero Programme provides grants of up to £30,000 to businesses to help them improve energy generation. To qualify for this grant, you need to own a registered business based in Birmingham, an energy consumption rate of at least 500kWh per year, a determination to reduce your business’s carbon emission, and a turnover of less than £50,000,000.

The popular clothing brand, PrettyLittleThing, is proof that a clothing business can thrive in the city.

4. Glasgow

Glasgow is a fashion-forward city in the UK with a thriving tech industry. Hence, it can be very profitable to start an online clothing business in this city. In addition to having the potential to give a strong customer base, Glasgow also offers a few grants for business owners in the city.

i) Glasgow Business Grant

The Glasgow City Council funds this programme with the objective of helping businesses grow, thus, creating more job opportunities. In other words, the grant programme provides up to £50,000 to Glasgow-based businesses seeking to expand and create more job opportunities.

ii) British Fashion Council New Talent Grant

The British Fashion Council funds with the aim of helping businesses grow by providing grants of up to £50,000. In order to qualify for this grant, your online clothing business should be based in the UK, and should not surpass three years of trade.

Cost of Starting an Online Clothing Business in The UK

1. Legal costs

You may not need any specific licenses to operate an online store in the UK. However, there are certain registration processes you need to complete. They include:

i) Business registration

In order to legally operate an online clothing business in the UK, you need to register your business with the HMRC (His Majesty’s Revenue and Customs). This can be done online at the cost of £12. The application process is dependent on your business structure. The processing period, however, is typically between 10 days.

If your business is a limited company, you need to register it with Companies House. Here’s a summary of the application process:

  • Choose a company name and structure
  • Appoint a director
  • Provide a registered office address. This could be your home address. The Companies House just needs a place to address all official letters.
  • Enter a Standard Industrial Classification (SIC) code. The code for an online clothing business store is 47910 – Sale
  • Fill out an incorporation form.
  • Pay a registration fee of £12.
  • Wait for your certificate of incorporation.

Click here to begin your online registration process. The processing period for online registrations is usually less than 24 hours and the processing period for postal applications is typically between 8 – 10 days.

ii) Trademark acquisition

Although getting a trademark for your brand is optional, it is recommended as it reduces the risk of copyright infringement. In order to qualify for trademarking, your brand needs to be distinct and unoffensive to the public. For a fee of £170, you can complete an application form either online or by post. If there are no oppositions to your application, the processing period is between 4 – 6 months.

iii) VAT registration

You need to register for VAT if your business’s annual income is up to £85,000. The VAT application process is an easy one that can be completed either online or by post for free. However, once the VAT registration process is complete, you will need to turn in either a monthly, quarterly, or annual VAT payment to the HMRC. The VAT application processing is typically between 30 – 40 days.

iv) Self-assessment tax registration

Self-assessment tax registration is necessary for sole traders and partners in a partnership. You need to have an annual income of at least £100,000 to qualify for registration. The registration process can be completed online or by sending an application form through the UK’s postal service at no extra cost. The processing period is between 5 days to 8 months, depending on ease of application.

2. Inventory costs

Whether you want to make the clothes you plan to sell yourself, or you want to buy them wholesale and ready-to-wear, you will have to spend some money on building an inventory. The amount spent on this is heavily dependent on the size and structure of your business, along with the size of your business capital. Although the amount of money spent on building an inventory is dependent on several factors, we can still provide a rough estimate to make budgeting and planning easy for you. You should expect to spend between £1,000 – £10,000 on building an inventory for your online clothing business in the UK.

3. Website fees

An important part of starting an online clothing business is owning a website. Although there are several e-commerce platforms available for your use, we recommend creating your own website for your business as this gives you full control of your brand. The cost of creating a business website is between £1,000 – £30,000.

4. Insurance costs

Whether online or offline business, you must protect your business from risks as much as you can. A simple way of doing this is by getting insurance. You may think that you don’t need to insure an online business but the truth is, you do. There are several risks attached to starting an online business and some of them include property damage, product liability, and data breach. An insurance plan protects you from all of these. Besides, insurance costs are relatively low as they range from £50 – £300 annually.

5. Packaging and shipping fees

You should also budget some money for packaging and shipping products to customers. Packaging and shipping costs are usually dependent on the size and weight of the product and as such, you should expect to spend £1 – £10 per package on shipping and between £1 – £2 per product on packaging.

6. Promotional costs

The key to most successful businesses is good PR, hence, promotion is an important part of starting a successful online clothing business in the UK. Find out what marketing strategies resonate with your target market the most and strategically implement them. You can determine the amount of money you spend on implementing promotional strategies but we would still provide an estimate. The amount of money you should expect to spend on marketing and promotions is between £1,000 – £2,000.

How To Start an Online Clothing Business in The UK

1. Conduct market research

Thorough market research is the first step to starting a successful business. This is because market research helps you understand the needs and preferences of your target market, thus, making it possible to cater to those needs while appealing to their tastes. For this reason, you must leave no stone unturned when researching your target market.

2. Draft a business plan

A business plan is important because it gives you foresight on how your business should go and helps you prepare better for it. It helps you plan better, budget better, and increase business productivity. Because of this, drafting the perfect business plan is paramount to creating your online clothing business success story.

3. Register your business

As opposed to registering a brick-and-mortar business, the process of registering an online business is simple and most of them can be completed online. Registering your business ensures that you are on the right side of the law while protecting your brand and brand identity.

4. Source for suppliers

You need trustworthy suppliers to provide your business with textiles and textile materials to sell. For this reason, you recommend that you choose suppliers with good reputations. Not only can the wrong supplier, disappoint you anytime, but they can also damage your business’s reputation with less-than-standard clothing material. A business is as good as its supplier and because of this, you need to be cautious when selecting a supplier for yours.

5. Set up your online store

You need an online store to start an online clothing business in the UK, or anywhere else for that matter. After securing a reliable supplier, the next step is to create your online store, whether on your website or other e-commerce hosting platforms. Keep in mind that your website should be easy to understand and navigate.

6. Implement promotional strategies

Because your clothing business is internet-based, digital marketing strategies may be the best option. Some of the most effective digital marketing strategies include:

  • Search Engine Optimization (SEO)
  • Video content creation
  • Social media marketing
  • Blogging

The best digital marketing strategies for you, however, are dependent on your business plan and the findings from the market research conducted.

How To Start an Online Clothing Business in the UK with No Money

If you are looking to start an online clothing business in the UK but you don’t have enough funding for it yet, dropshipping may be your best option. Dropshipping is an excellent way to start an online clothing business with zero costs. Along with not needing an inventory, a dropshipping business does not need to get registered and you can earn up to 100,000 yearly. E-commerce platforms like Shopify, Wix, and Square Online make it possible to set up your online store for free and there are also free dropshipping suppliers like AliExpress, Oberlo, and SaleHoo. Check out our previous post to find out more about the dropshipping business and how you can get started.

Tips on Starting a Successful Online Clothing Business in The UK

1. Niche down

Because of how competitive the UK fashion market is, it is always better to stick to a niche and become great at it than to try to handle so many things at once. Once you have selected a niche, focus on growing within your selected niche. For example, say you have chosen to sell female clothing. You can start by selling all kinds of tops. With time, you will expand to selling pants too…and then dresses…and then female shoes (notice that you have now begun exploring other parts of your niche). Once you have solidified your image in the women’s clothing, you can begin to explore other niches.

2. Make your website aesthetically pleasing and user-friendly

A beautiful website design will get a potential customer’s attention but if the website is difficult to navigate, the customer will quickly lose interest. At the same time, if your website layout isn’t attractive enough, you may lose potential customers right off the bat. For this reason, the aesthetic and user-friendly qualities of your e-commerce website are of equal importance enough. Add attractive cover images to your website while ensuring that the website is easy to use.

3. Build a strong online presence

Building a strong online presence is essential to creating a strong online clothing brand. This can be achieved by employing various digital marketing like blogging and video content creation to increase your brand’s online popularity. Regardless of the digital marketing strategy you choose to employ, ensure that you stay consistent with it as this increases your chances of earning a strong presence online.

4. Sell high-quality products

The importance of high-quality standards cannot be overemphasized. Do not compromise on quality for any reason as doing this can cause significant damage to your business’s reputation even after you have succeeded in creating a strong online presence. Matter of fact, the stronger your online presence, the more damage a change in your quality standards will do. Do whatever it takes, to maintain high-quality standards for your online clothing business.

5. Provide excellent customer service

You know the popular saying, “The customer is always right”? Well, if you want your business to thrive, you have to keep this saying in mind because a single unhappy customer has the potential to damage your business’s reputation. Do your best to keep customers happy from the moment they place an order till when their order is fulfilled because a happy customer can do as much good for your business as an unhappy customer can do damage. In essence, value your customer’s opinion and provide top-notch customer service. As it is impossible to keep everyone satisfied, treat customer complaints with warmth and receptiveness.

Conclusion

The textile industry in the United Kingdom is a thriving one and as such, it can be a competitive industry. However, there are also several factors like the economic stability, the availability of basic amenities, and the country’s high internet penetration rate that make the UK the perfect place for an online clothing business. This all-inclusive guide to starting an online business in the UK is an excellent place to begin your adventure into the online fashion world and now that you have completed this article, you are ready to begin the next phase of your entrepreneurial journey: putting all you have learnt to practice. We wish you all the best on this significant adventure you have decided to embark on.

Image Credits: All images on this website are sources from Getty Images, Pexels and Unsplash.

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