Millions of people across the UK are now running small ecommerce businesses, either as a way to supplement their income or as a full-time alternative to traditional employment. But according to one UK accountant, many of these sellers are falling into the same trap, and it could be costing them far more than they realise.
The issue, he says, is an overemphasis on sales figures rather than the actual profit being made.
Growth
Estimates suggest around one in five Britons now sell products online, using platforms such as Amazon, eBay, Etsy, and Shopify. For some, it is a flexible side hustle. For others, it has become a necessity due to difficulty finding paid work.
While high sales numbers can appear encouraging, an accountant working closely with online sellers says they often hide an uncomfortable reality.
Warning
Harvey Dhillon, founder and chief executive of UK-based accountancy firm Zmartly, says many small business owners are focused on the wrong metric.
“There’s a well-known saying in the business world: turnover is vanity, profit is sanity, but cash is king,” he said. “As a company that works with hundreds of ecommerce sellers, we regularly see too many people focused on turnover rather than profit, and that needs to change.”
According to Dhillon, turnover is one of the most misleading figures in small business accounting, particularly for online sellers who are new to running a business or working from home.
Reality
He explained that impressive sales numbers often fail to reflect what sellers actually earn.
“A person generating sales of £100,000 a year on Amazon or eBay will tell you they run a six-figure business,” Dhillon said. “That sounds very impressive until you look at what actually reaches their bank account, as we do each day.”
He pointed out that a range of costs quickly eat into revenue, including platform fees, advertising spend, shipping, returns, payment processing charges, the cost of stock, and tax.
“We regularly see sellers turning over six figures who are effectively working full-time for less than they would earn stacking shelves,” he added. “They often have no idea until someone shows them the real maths.”
Margins
Dhillon said the key issue is that many sellers track sales volume but fail to monitor profit margins on individual products.
He urged online sellers to analyse which products actually generate profit and which only create the appearance of success.
“Looking at products that generate the best margins is second nature to experienced business owners,” he said. “But for people starting out or who have never run a business before, that often is not the case.”
According to Dhillon, sellers should be prepared to drop products that sell well but lose money, and instead focus on those that produce consistent profit.
Focus
He acknowledged that reducing sales volume can feel counterintuitive, especially when sellers enjoy seeing strong growth charts and rising turnover.
“Yes, making fewer sales can feel less exciting than a big sales graph,” he said. “But understanding that it can lead to a stronger and more profitable business is the difference between a draining hobby and a business that pays you.”
Dhillon said the most important figure for any seller is not how much they sell, but how much they keep after all costs are accounted for.
As more people turn to ecommerce for income, accountants say clearer financial awareness may determine whether these ventures become sustainable businesses or costly side projects.
FAQs
What mistake do side hustlers often make?
They focus on sales instead of actual profit.
Why is turnover misleading?
It does not show costs like fees, tax, and advertising.
Who gave the warning?
Harvey Dhillon, founder of UK accountants Zmartly.
What should sellers track instead?
Profit margins on individual products.
