Picking where to sell online is one of the first big decisions you'll make as a UK ecommerce seller, and it shapes your costs, your margins, and how much tax admin lands on your desk later.
There's no single "best" platform. A handmade candle maker, a wholesale dropshipper, and a vintage furniture dealer all need different things. What matters is matching the platform to your products, your customers, and how hands-on you want to be.
This guide walks through the main options open to UK sellers (online marketplaces, your own website, and social selling), how to weigh them up, and the VAT and tax points that catch people out once the orders start coming in. It's written for owners who want to choose well the first time and keep the books tidy as they grow.
<a id="what-to-consider"></a>
What should I consider when choosing an ecommerce platform?
Before you commit, it helps to be honest about what your business actually needs. The flashiest platform isn't always the right one.
Ask yourself:
- Where do my ideal customers already shop and spend time online?
- How much control do I want over branding, pricing, and the customer experience?
- Am I happy to drive my own traffic, or would I rather tap into an existing audience?
- Do I want help with fulfilment, or will I pick, pack, and post myself?
- What are my margins, and how much can fees eat into them?
- Do I want to own my customer data, or am I comfortable the platform keeps it?
It's also worth thinking ahead. Selling fees and subscriptions, payment processing, how easily you can sell internationally, and whether the platform connects to your accounting software all affect how the business runs day to day.
Most successful sellers we work with don't treat this as a one-off choice. They start where it's easiest to test demand, then add channels as they grow. If you sell to consumers, you can read more about how we support online sellers on our ecommerce accounting page.
<a id="platform-types"></a>
What are the main types of ecommerce platform?
Broadly, your options fall into three groups. Most platforms sit clearly in one.
| Type | Examples | You get | You give up |
|---|---|---|---|
| Online marketplace | Amazon, eBay, Etsy | Built-in traffic, buyer trust, fulfilment options | Higher fees, less branding, limited customer data |
| Your own website | Shopify, WooCommerce | Full control, your data, lower per-sale fees | You drive all the traffic and handle support |
| Social selling | Facebook, Instagram, TikTok | Reach, discovery, community | Algorithm dependence, lighter selling tools |
The right mix depends on what you sell and how you want to grow. Let's look at each.
<a id="marketplaces"></a>
Online marketplaces: what are they best for?
Marketplaces such as Amazon, eBay, and Etsy put your products in front of buyers who are already there with their card out. That's their biggest strength.
Amazon suits sellers who want reach and hands-off fulfilment. With Fulfilment by Amazon (FBA), Amazon stores, picks, packs, and ships your stock, and handles a lot of customer service. The trade-off is higher fees, fierce competition, and very little control over branding or customer data.
eBay remains strong for one-off, used, collectible, and niche items, and it still offers auction-style listings alongside fixed prices. It's flexible, but fees and fund-hold policies can bite.
Etsy is built for handmade, vintage, personalised, and creative products. Its audience comes looking for exactly that, so a craft seller can find buyers quickly. It's a poor fit if your products are generic.
The common theme: marketplaces trade higher fees and less control for ready-made traffic and trust. For a brand-new seller testing whether people want the product at all, that's often a sensible first step.
<a id="own-website"></a>
Your own website: when does it make sense?
Running your own store, whether on a hosted platform like Shopify or a self-managed setup like WordPress with WooCommerce, gives you the most control.
You own the branding, the customer experience, and crucially the customer data, so you can market to past buyers by email rather than starting from scratch each time. Per-sale fees are usually lower than a marketplace's because you're not paying for someone else's audience.
The catch is that nobody is sending you traffic. You have to earn it through SEO, content, paid ads, or social media, and that takes time and money. You're also responsible for support, security, and fulfilment.
A hosted platform is quicker to launch and easier to run, with hosting handled for you. A self-managed WordPress and WooCommerce setup is more flexible and can be cheaper to run, but it asks more of you technically.
This route tends to make sense once you've proven demand and want to build a brand asset you control, rather than renting space on someone else's marketplace.
<a id="social-selling"></a>
Social selling: who is it right for?
Facebook, Instagram, and TikTok are where discovery happens, especially for visual and impulse products.
Facebook offers Shops and Marketplace, with strong reach and detailed advertising tools. Instagram is ideal for visually led brands in fashion, beauty, food, and lifestyle, though in the UK it often works best as a shop window that sends shoppers to your website to buy. TikTok, through TikTok Shop, can reach younger audiences fast and rewards authentic content over polish, which lowers the barrier for small brands.
Social selling can be very low cost to start, but you're at the mercy of each platform's algorithm and policy changes, and the native selling tools are lighter than a dedicated store's. Many sellers use social channels to drive discovery and then convert on a marketplace or their own site.
Illustrative example. Sarah makes hand-poured candles as a sole trader. She tests demand on Etsy, where craft buyers already shop, while building an Instagram following to show off new scents. As repeat orders grow, she adds her own Shopify store so she can email past customers and keep more margin per sale. Etsy proved the demand; her own site became the long-term home. The seller and scenario here are illustrative, not a real client.
<a id="cheapest"></a>
Which platform is cheapest for a UK small business?
It's tempting to rank platforms purely on fees, but the honest answer is that "cheapest" depends on your sales volume and how much traffic you'd otherwise have to buy.
As a rule of thumb:
- Marketplaces charge no or low monthly fees but take a meaningful percentage of each sale. You pay more per order in exchange for their audience.
- Your own website usually has lower per-sale costs (mainly payment processing) plus a subscription or hosting cost, but you fund your own traffic.
- Social platforms can be very cheap to list on, with costs landing mostly in advertising.
Published fees change often, so always check each platform's current pricing page before you commit, and read the small print on payment processing, currency conversion, and any fulfilment charges. Don't compare on headline percentages alone.
The smarter comparison is your total cost to make a sale, including the cost of getting a customer to the page in the first place. A marketplace's higher cut can still work out cheaper than running ads to your own site, especially early on. The way to know is to map your own numbers. Our self-employed tax calculator can help you see how different profit levels feed through to your tax bill once costs are accounted for.
<a id="tax-vat"></a>
What tax and VAT issues do online sellers need to plan for?
This is where the platform choice quietly shapes your accounting. Whatever you sell on, the UK tax rules are the same, and a few catch sellers out.
When do I need to register for VAT?
You must register for VAT if your VAT-taxable turnover goes over the registration threshold of £90,000 in any rolling 12-month period, or you expect to cross it in the next 30 days alone. This applies whether you sell on a marketplace, your own site, or social media. Once registered, the standard VAT rate is 20% on most goods.
Marketplace sales count towards that threshold just like sales from your own website, so multi-channel sellers need to track total turnover across every channel, not per platform. If you're approaching the limit, plan early; our team can walk you through it on our tax advisory page.
Do I pay tax on profit or on turnover?
You pay tax on profit, not on the total your customers pay. So platform fees, payment processing, postage, packaging, and the cost of stock are deductible business expenses that reduce your taxable profit. Keeping clean records of these is what makes the difference at year end.
If you trade as a sole trader, you'll report profits through Self Assessment. If you run a limited company, the company pays Corporation Tax at the small profits rate of 19% on profits up to £50,000, rising towards the main rate of 25% on profits over £250,000, with marginal relief in between, for the financial year from 1 April 2025. Company owners often take a mix of salary and dividends; for 2025/26 the dividend allowance is £500 and dividends above it are taxed at 8.75% (basic rate), 33.75% (higher rate), and 39.35% (additional rate). You can estimate the impact with our dividend tax calculator.
What is Making Tax Digital and does it affect me?
Making Tax Digital (MTD) for VAT already applies to all VAT-registered businesses: you must keep digital records and file VAT returns using compatible software.
MTD for Income Tax is arriving in stages for sole traders and landlords. From 6 April 2026 it applies to those with qualifying income over £50,000 (based on the 2024/25 tax year), from 6 April 2027 to those over £30,000, and from 6 April 2028 to those over £20,000. If your online sales push you over these levels, you'll need digital records and quarterly updates, so it's worth choosing a platform and bookkeeping setup that export cleanly into accounting software now.
<a id="bookkeeping"></a>
How do platform choices affect your bookkeeping?
The more channels you sell on, the more places your money and data live, and the harder it is to see the full picture.
A few practical points:
- Reconciliation. Marketplaces and payment processors pay you net of fees, often in batches. You need to record the gross sale, the fee, and the payout separately so your VAT and profit are right.
- Multi-channel totals. If you sell across several platforms, your VAT threshold and your profit are based on all of them combined, not each one alone.
- Software integrations. Most established platforms connect to mainstream accounting software, directly or through an app, which saves hours of manual entry. Check this before you pick a platform if you can.
- Records. Keep evidence of sales, fees, and expenses. Good records make Self Assessment, VAT returns, and any future MTD filing far less painful.
This is the part most sellers underestimate. Getting the bookkeeping foundations right early means you can add channels confidently instead of dreading the year-end scramble. If you'd rather hand it over, see how we help with bookkeeping for online sellers.
Want help getting your ecommerce finances right?
Whether you're choosing your first platform or selling across several, Zmartly helps UK online sellers keep clean books, stay VAT-compliant, and pay no more tax than they need to. Book a free 20-minute call with a Zmartly accountant who understands ecommerce, and we'll help you set up for growth. Visit our ecommerce accounting page to get started.
<a id="faqs"></a>
Frequently asked questions
What is the best ecommerce platform for a UK small business?
There isn't one best platform for everyone. Marketplaces like Amazon, eBay, and Etsy suit sellers who want ready-made traffic. Your own site on a hosted or self-managed platform suits those who want control and lower per-sale fees. Social platforms suit discovery and visual products. Match the platform to your products, customers, and how hands-on you want to be.
Which ecommerce platform is cheapest in the UK?
It depends on your sales volume and how much you'd spend acquiring customers. Marketplaces usually take a larger cut per sale but supply the audience, while your own website has lower per-sale fees but needs you to fund traffic. Compare your total cost to make a sale, not just headline fee percentages, and always check each platform's current pricing.
Do I need to register for VAT to sell online in the UK?
You must register for VAT if your VAT-taxable turnover exceeds £90,000 in any rolling 12-month period, or you expect to within the next 30 days. This applies across all sales channels combined, not per platform. Once registered, the standard VAT rate is 20% on most goods.
Do online sellers pay tax on sales or on profit?
You pay tax on profit, not on total sales. Platform fees, payment processing, postage, packaging, and stock costs are deductible business expenses that reduce your taxable profit, so keeping accurate records of these matters at year end.
Does Making Tax Digital apply to online sellers?
MTD for VAT already applies to all VAT-registered businesses. MTD for Income Tax starts from 6 April 2026 for sole traders and landlords with qualifying income over £50,000, then over £30,000 from April 2027 and over £20,000 from April 2028. If your online sales reach these levels, you'll need digital records and quarterly updates.
Can I sell on more than one platform at once?
Yes, and many UK sellers do, using marketplaces or social channels to reach new buyers while driving repeat sales through their own site. Just remember your VAT threshold and your profit are based on all channels combined, so your bookkeeping needs to pull everything together.
<a id="sources"></a>
