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A Nation of Virtual Shopkeepers

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Economists trying to figure out what is going on in the UK economy, and specifically why the number of people saying they are self employed is so high, should perhaps look no further than recent data on on-line selling by households from the Office of National Statistics. Released in August, it shows that one in four households had used the internet to sell something over a three-month period, rising to one-third in the 24-44 age range. Not so much a nation of shopkeepers then, but a nation of Ebay traders, AirBnB letting agents and "preloved" declutterers.

The significance of this, is that selling online increases incomes. The internet is no longer a luxury used by the early adopters in the middle classes; all groups in society now have the ability to reach a global marketplace from the comfort of their bedroom, or indeed wherever they like via their smartphone. For some groups internet access is practically universal: 96 per cent of households with children, for example, are now on-line and socio-economic background doesn't make much of a difference when determining who sells online.

While we are all benefitting from the ability to sell over the internet, for some more vulnerable groups it is particularly useful. Research commissioned by Google and released on Wednesday [15th October] by Tooley Street Research demonstrates, for example, that parents of pre-school children are disproportionately more likely to engage in on-line selling from home than others, with a strong effect amongst the lowest income families. This is the internet providing opportunities for people who cannot access traditional jobs to raise incomes, helping to alleviate child poverty.

Outside of the household sector, the internet has also created economic opportunity for other more economically vulnerable people. A specially commissioned survey of Google Apps customers also released today, demonstrates the existence of a group of people with lower educational qualifications nevertheless running viable internet-dependent microbusinesses.

Specifically, nearly half of those businesspeople responding to the survey whose highest qualification is at GCSE level, but with internet-dependent businesses, are able to secure incomes of over £45,000, with a further 20 per cent earning between £30,000 and £45,000. This may indicate that the internet enables those with comparatively lower qualifications to achieve their economic potential outside of the formal career structures. Indeed among Google Apps clients, those with university degrees were just as likely to assert that their business depended on the internet as those whose highest qualification was at GCSE level.

The same survey also demonstrated that people with lower levels of education are more aware that setting up an online business is less risky than a "traditional" business; and also that companies in some of the more remote parts of the UK are particularly dependent on the internet for trading.

It is not surprising, of course, that Google Apps clients should consider their business to be dependent on the internet given they have already chosen cloud-based commercial tools. What is of relevance is that people from a variety of backgrounds should be expressing these views. It is not just the uber-professional elite that is exploiting the commercial opportunities that the internet has to offer.

Once that is understood, there are implications for public policy. It's better for example, to be earning something through trading online in a self-employed way than to be unemployed, even if for some it might be a second best option. And now we know that this is something everyone can take advantage of, it's important that people actually do.

As a starting point the current consultation by the ONS on how to measure the digital economy should lead to far more information about the types of goods and services that households, sole traders and microbusinesses are selling on-line, and start to quantify the potential effect on take-home household incomes. The next task is to understand the barriers to raising household incomes through online trading amongst target cohorts, so that these barriers can be broken down.

In future years, households will be more adept in using new technologies to sweat their own personal assets more effectively, be it their skills, time, cars or renting out spare bedrooms. The task for policy makers is to ensure the more economically vulnerable are just as well placed to do so as everyone else.

The effect of the internet on the economically vulnerable is published today at www.tooleystreetresearch.co.uk

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