Almost 50% of online merchants have reported that their sales are up on last year so far, despite the VAT increase in January, according to research by SecureTrading, the UK's leading independent payment processor.
Approximately 10% of merchants have reported that sales are higher than expected, while 55% claim that sales are in line with their expectations.
Meanwhile, half of the merchants surveyed have taken on the increased VAT cost internally rather than pass this onto the customers. However, 20% have said they do plan to pass these costs on in the next three months, while 52% have no plans to pass these costs on in the future whatsoever.
Tim Allitt, Head of Sales & Marketing, SecureTrading, said, "Many traditional high street retailers struggled in the run-up to Christmas and this has continued for some in the New Year. However, online merchants are continuing to perform strongly despite the current economic challenges. With the continued growth of online shopping and the rapid take-up by consumers of smart phones, we expect to see this sector go from strength to strength despite the VAT rise. Merchants are working hard to deliver a great experience to their customers."
Almost 20 per cent of online merchants have introduced VAT-beating promotions to incentivise customer spending. Many merchants are confident that 2011 will be an even better year for online retailing with 72% expecting to perform better than last year.
Allitt added, "Online merchants will have to increase their efforts in 2011 to continue to perform strongly. It's essential that businesses partner with an experienced and secure payments processer to ensure they can meet customer expectations for a speedy and convenient service."