Holly Tucker and Sophie Cornish are struggling to cope with the rapid growth of Notonthehighstreet.com, the business they set up two years ago. Sales are up 350% on last year and are predicted to reach £3.5m this year.

Despite gloomy predictions for the economy, Tucker and Cornish don’t plan to stop there. They have just secured £1m from a private investor for further expansion.

The online boom is helping many other small retailers and suppliers to flourish in the downturn. Online shopping grew 38% year on year in the first six months of this year, says IMRG, a trade body for online retailers. This is in stark contrast to the trend of falling high-street sales, which declined 3.9% in June, according to the latest figures from the Office for National Statistics.

In fact there is evidence that as consumers are squeezed by the soaring cost of petrol, energy and food they are searching for the keenest prices, something that is easier to do on the web, according to Michael Petevinos of Cap Gemini, which tracks online retailing.

As internet shopping enters the mainstream it offers a powerful advantage for small, nimble players. “Setting up online gives you a much greater reach for your products and at much lower cost,” said Petevinos. “It has completely changed the proposition for many smaller retailers and suppliers.”

The future looks bright. Online spending now represents 17% of consumer spending, and web shopping is expected to account for 30%-50% in the next five years.

Smaller players with the right strategies are already benefiting, according to David Smith of IMRG.

“It is often the smaller retailers with niche products or with interesting retail propositions that seem to be having success. There will be a lot of opportunities for smaller players to profit if they can manage their start-up costs, get their supply chains right and work closely with their customers.”

Notonthehighstreet sources good-quality clothes, gifts and homewares from small producers who could never survive with their own retail outlets or by dealing with the big chains, said Tucker.

“We provide an opportunity for thousands of independent suppliers to sell their products,” she said. “Sites like ours are acting as a kind of shop window for the long tail of the internet.”

Umbrella sites that promote goods or services from hundreds or thousands of suppliers are one reason internet sales are booming. Sites such as clothing site Asos.com, Notonthehighstreet.com and Mydeco.com, the latest venture from internet entrepreneurs Martha Lane Fox and Brent Hoberman, are helping consumers make sense of the chaos of searching for goods online.

“The days when you had to wade through a million hits every time you searched for an item have gone,” said Tucker.

Explore Entrepreneur

• SME

• Start-ups