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Brits to Spend £42bn Online in 2008

Thirteen years on since the first secure online shopping transaction in August 1994, e-retail represents a huge market for British retailers. The IMRG has released its annual statement detailing the current industry trends. Tim Hoang looks at the findings.

On August 11, 1994, NetMarket, a web retailer based in Nashua, New Hampshire, claimed to have made the very first secure retail transaction on the web. According to former NetMarket founder Daniel Kohn, the first item purchased via the site was the CD "Ten Summoner’s Tales" by Sting. With online shopping now representing around 10 per cent of all sales in the UK, it is no surprise to find that in 2007, UK online shoppers will have spent £42 billion according to industry body for global e-retailing, IMRG.

The IMRG has published its report for 2007, revealing that:

- £42 billion will be spent online by UK shoppers

- 860 million parcels will be shipped to the UK’s 26 million internet shoppers

- Online shoppers will spend £1,600 each on average

The catalyst for this lucrative market is the uptake of home broadband. Recent information gathered by National Statistics (ONS) show that nearly nine in 10 (88.4 per cent) of Britons are connecting to the Internet using broadband services rather than dial up. Of the 30 million Britons using broadband, half of those surveyed by the IMRG either ‘often’ or ‘always’ carried out online research the product they were intending to purchase. According to the same survey, online shopping also represents better value and convenience for consumers. 97 per cent of consumers consider online prices to be ‘competitive or better’ than their high street counterparts and 38 per cent of shopping takes place outside regularly shopping times.

E-retail has seen huge growth over the last six years and looks set to continue for several years. Between April 2000 and December 2006, the industry grew 3,500 per cent and in the first three weeks in December 2006, £7.66 billion was spent online, one and a half times more than the same period in 2005 and more than double the £3.33 billion spent in the run up to Christmas 2004.

The key to this thriving economy is that the Internet has no boundaries based on the origin of the company and as such smaller retail outlets now potentially have a billion or so customers around the world. With around 17 per cent of the world’s population now using the Internet, a prosperous e-commerce industry will prove vital to the success of the economy of the UK.

Of the billion people around the world that use the Internet, a third of those live in the EU. With a GDP larger than that of the US, the EU looks set to become the UK’s ‘local’ marketplace. At the moment the amount of cross border sales greatly varies between countries with only nine per cent of UK consumers having made purchases through websites from different countries compared to 40 per cent of Internet users in Luxemburg. However, this figure is potentially lower than the real number as often the origins of a website is vague at best, especially with digital download sites.

With the advent of web 2.0 technologies and more targeted marketing using social media sites, the e-retail market can only prosper. The Internet will soon provide retailers and brands the tools in which to target audiences more effectively and by 2010, UK online sales are predicted to double by 2010 and the international trade is expected by 100 per cent during the same period.

According to the IMRG, next year will be another prosperous one for e-retailers with the industry further evolving from a ‘disruptive phenomenon’ to a mainstream retail channel. The IMRG predicts that 2008 will be characterised by:

-Inclusivity: the people of all abilities being enabled to enjoy online shopping

-Normalisation: online shopping being an indispensable component of everyday life

-Diversification: towards all-inclusive ranges of goods and services being available

-Sophistication: online shopping becoming easier, quicker, richer better, safer and more satisfying

-Exclusivity: a rise in specialist boutiques, offering more niche and exclusive goods.

The IMRG comprises of hundreds of enterprises operating throughout the industry. From retailers who sell products and services direct, and suppliers that provide solutions to services and retailers and includes the likes of Amazon.com, Dell, Google and Tesco among its members.