The UK is one of the most internet-based economies in the world according to researchers at the Boston Consulting Group (BCG). Worth £121 billion in 2010, it contributes to 8.3% of the UK economy, growing at a faster rate than other countries.
The UK also carries out far more retail online, reports the BBC. Some 13.5% of all purchases were done over the internet in 2010, according to the study, and this is projected to rise to 23% by 2016. Researchers predict it will continue to expand at a rate of 11% per year for the next four years, reaching a total value of £221bn by 2016. That compares with projected growth rates of 5.4% in the US and 6.9% in China. (Travelmole, March 2012)
32 million people (66% of all adults) in Great Britain purchased goods or services over the internet in 2011, according to the Office for National Statistics. This was an increase from 62% in 2010.
Clothes/sporting goods were the most popular online purchase in 2011, with 46% of internet users buying these items. Half of female internet users (50%) purchased clothes/sporting goods online in 2011, the most popular purchase by women by some margin. While clothes/sporting goods were also the most popular purchase by men, at 43% of internet users, this was closely followed by films/music at 40%.
Those aged 65 and older were the only age group not to report clothes/sporting goods as the most popular purchase. (Office for National Statistics, August 2011)
The number of adults who bought goods or services online in the past year totalled 31 million, or 62% of all adults, according to a report by The Boston Consulting Group (BCG) titled "The Connected Kingdom: How the Internet Is Transforming the U.K. Economy". Collectively, they spent about £50 billion in 2009 on goods and travel.
UK internet economy contributed £100 billion in 2009, representing 7.2% of UK GDP; more than construction, transport, or utilities. The report finds that this share is likely to grow by about 10% annually, reaching 10% of GDP by 2015. Around 60% of this total is driven by "consumption"-the amount that internet users spend on online shopping and on the cost of their connections and devices to access the internet. The remainder comes from investment in the UK's internet infrastructure, government IT spending, and net exports.
The report finds that the UK is now the world's leading country for e-commerce and that UK businesses are using the internet to expand their sales overseas. The UKis now a net exporter of e-commerce goods and services, exporting £2.80 for every £1 imported. This is the opposite of the trend seen in the offline economy, which exports 90p for every £1 imported.
In order to measure the reach and depth of the internet in the UK and to make comparisons with other countries, BCG created an international "e-Intensity Index" covering the nations of the Organisation for Economic Co-operation and Development (OECD). Overall, the UK ranks sixth, scoring similarly to the Netherlands, Norway, and Finland and better than Germany, the US, and France. The highest-ranked country is Denmark.
A regional e-Intensity Index showed similar variations within the United Kingdom. London emerged as the leading region, followed by the South East and the East of England. The rest of England finished in the middle, and Wales, Scotland, and Northern Ireland scored fairly poorly.
The report was commissioned by Google UK but was researched and written independently by BCG. The size of the UKs internet economy had not previously been widely studied, and the aim of this report is to address this knowledge gap regarding this growing sector of the UK economy. (BCG - The Boston Consulting Group, October 2010)
The latest results from the IMRG Capgemini e-Retail Sales Index reveal that shoppers spent £5 billion online in July, the most in any month this year. With Brits spending an average of £81 per person, online retail has shown a marked turning point since the lows of the last two years with consistently high growth levels throughout the first half of 2010.
The Index has grown by 18% compared to last July, in the biggest annual jump for the month of July since before the recession in 2007. As retailer promotions drew shoppers online, an impressive growth rate of 14% was recorded compared to June - the highest monthly growth of 2010 so far.
A true British summer materialised in late July, with over twice the average rainfall for the time of year recorded. Growth in travel sales rose by a third as a result, with Brits escaping the drizzle in favour of last minute deals in hotter climes. The travel sector grew by a greater amount compared to June than any other sector analysed in the Index, as consumers took advantage of heavy discounting by travel companies to book last minute holidays.
The performance of retailers with a high street and an online presence continues to outshine that of online only retailers. Multichannel retailers witnessed growth of 18% compared to last month, while online only (‘pureplay') retailers showed month on month growth of only 8%. Multichannel retailers are also managing to convert more browsers into actual sales, with an average conversion rate of 4.49%, compared 4.35% for online only retailers. (imrg.com, August 2010)
The IMRG/BPS Internet Access and Online Shopping in Britain report for the second quarter of 2010 shows that internet users visiting social networking and blogging sites have grown to 48.9%, a four-fold increase over the same period in 2008.
While overall access to the internet continues to increase - more than half of the UK population now goes online at least once a day - the number using the internet for online search is not increasing at the same rate, falling by 0.5% during the first half of 2010 from 73.7% to 73.2%.
Online shopping continues to increase - up from 66% to 67.3% during the same period - and continues to increase its share of online search. Of those using online search, the number actually shopping online increased by 2.4% to 91.9%.
How we access the internet also continues to change radically. For the first time there is now evidence of the growing importance of internet access via a mobile device, which, as a proportion of access methods, has grown to 15.1%, from only 5.0% in June 2008.
While a picture of consumers increasingly using their mobiles and other devices to visit social networking sites and to shop online may drive preconceptions about their age, growth in these areas is not limited to the youth market.
A quarter of those with internet access are over 55 and while growth in internet access across the population has averaged 13% since June 2008, the 65+ age group has seen access increase by 26% over the same period.
The more sobering insight from the survey is that, while online shopping is still showing a healthy increase in sales (IMRG reported June 2010 sales up 25% year on year at £4.4 billion), there is still a lot to play for with 23% of the adult population still without internet access and nearly a third of those with access not yet shopping online. (imrg.com, August 2010)
A recent report reveals that retailers see diversifying into multi-channel sales operations such as e-commerce is critical to the sector's future. The report, from independent think tank FreshMinds, ‘Multi-Channel Matters: A route to next generation retailing', has been commissioned by DHL Supply Chain. The study is based on extensive research carried out with 500 UK-based retailers plus in-depth analysis with senior professionals and academics within the sector.
Retailers increasingly recognize the necessity of a multi-channel strategy, with 69% already saying that having a multi-channel operation is ‘very important' or ‘essential' to their business and 25% of businesses considering the biggest growth opportunity for their organization to be establishing new channels to market. The report also confirms that e-commerce is set to stay on its growth trajectory with nearly two thirds (66%) of those surveyed stating they expect to either start or grow e-commerce sales via own-brand websites over the next three years. Furthermore, 32% of the companies surveyed expect to invest most heavily in the e-commerce channel over the next 12 months.
M-commerce was revealed as an emerging channel that retailers plan to enter, with 10% indicating intentions to start selling via mobile applications or devices over the next three years. As 90% of the population now owns a mobile phone, high street retailers such as Next, Warehouse and Barratts are leading the pack, creating mobile tools to allow consumers to access their products 24 hours a day.
Of those planning to enter or grow revenue from the M-commerce market, 35% state this is due to growing consumer demand for the channel while 28% believe using M-commerce positions them as an innovator. The ‘bricks and mortar' channel will remain a significant component of a successful retail brand strategy as 48% of the retailers who consider high street channels an important growth area stated that they do so because it is good for their brand presence. (imrg.com, August 2010)
Most UK merchants expect mobile commerce to be part of their main strategy within the next 12 months, and more than 40% plan to have a transactional mobile site or application within the next year, according to a survey carried out by eDigital Research for the Association for Interactive Media and Entertainment (AIME), the Internet Advertising Bureau (IAB) and the Interactive Media in Retail Group (IMRG).
Researchers asked 140 marketers associated with retail, advertising or mobile services about their attitudes to mobile commerce. Of the senior-level representatives from UK retail brands, 94% said they considered m-commerce a significant business opportunity, and 59% said they expected their mobile revenues to increase over the next 12 months.
Current m-commerce revenues in the UK are relatively small; 63% of merchants polled by eDigital Research said they made less than 1% of their total revenues from mobile, or did not even measure income from the mobile channel. But retailers are beginning to recognize the emerging demand for mobile shopping. According to comScore and the GSMA, 4.2 million UK consumers per month are using the mobile internet to visit retailers' websites. Moreover, Brandbank's "2010 mCommerce Content Report" noted that growing numbers of UK smartphone users are engaged in shopping behavior on their handsets; just 19% of smartphone owners surveyed in May 2010 said they did not use their mobile phone to help them shop.
Retailers will also be encouraged by recent growth in UK e-commerce overall. Online spending by UK consumers reached £5 billion ($7.9 billion) in July 2010, according to the IMRG and Capgemini e-Retail Sales Index. That marked a 14% rise on June 2010 and an 18% increase on July 2009-as well as the highest leap in ecommerce spending since 2007. Average spend per person was £81 ($127).
All market sectors recorded higher sales in July 2010 than in July 2009, the index reported. Wet weather at the end of the month contributed to internet sales by keeping many shoppers indoors. Rain also drove visits and purchases at travel websites as consumers arranged escapes to sunnier destinations. Many travel operators had pushed their prices to rock-bottom, too, because the recession and flagging consumer confidence left many flights and package holidays unsold at the start of the summer. (emarketer, August 2010)
Against a background of economic uncertainty, UK business-to-consumer ecommerce sales including travel grew 14% in 2009, to £49.8 billion ($78.2 billion), the Interactive Media in Retail Group reported. Online sales growth will continue to outpace growth in overall retail sales in 2010 and 2011, as more shoppers use the web to save time, stretch their pennies and buy items not readily available in nearby physical stores.
Books, music and films were among the items most often bought online in 2009, but clothing, consumer electronics and groceries were also popular purchases. The categories gaining most in 2009 included holidays and travel, event tickets, footwear, women's clothing, and food and drink, according to the Royal Mail.
Mobile commerce has barely taken off, however. Verdict Research calculated that 2.1% of UK adults used the mobile web to shop in 2009. As a result, m-commerce purchases amounted to just 0.6% of total retail ecommerce sales, or £122 million ($192 million).
UK online shoppers admit to having become more demanding. As multichannel retailers leverage their physical infrastructure to cut costs and improve customer service, pure-play merchants also need to innovate and fine-tune their value propositions. (emarketer, August 2010)
The popularity of online shopping is continuing to grow rapidly, with over half of the British population aged 15 or older shopping online, according to an IMRG report prepared by the British Population Survey (BPS). The 50% benchmark was achieved for the very first time in February 2010 (50.6%), while March saw further growth in the number of online shoppers to 51%.
Percentage of British population aged 15 and older shopping online 2008-2010:
- March 2008: 43.4%
- March 2009: 46.6%
- March 2010: 51.1%
Of particular significance to the long term growth of online shopping, the survey reveals a narrowing in the gap between those who search for product information online and those who actually purchase: in March 2008, the ratio was 17 Shoppers to every 20 Searchers, and by March 2010 this was 18 to 20.
BPS conducts over 80,000 face-to-face in-home interviews each year with an accurate cross-section of the entire adult population. The report concentrates on the first quarter of 2010 to provide a detailed national view of those who are internet shoppers, who and where they are, how they access the internet, and how they search for products and shop online. (IMRG, April 2010)
There was a significant increase in UK retail sales coming from mobile in the first quarter of 2013. According to research by the Interactive Media in Retail Group (IMRG) and Capgemini, 20.2% of UK retail ecommerce sales came through either smartphones or tablets that quarter, up from 15.4% in the previous quarter.
Even if mobile is not the first choice for all buyers, there is no question that the convenience and deals available on mobile are convincing more to make mcommerce purchases. A InMobi survey, conducted by On Device Research, found that, even as far back as Q2 2012, 63% of mobile phone users had already bought something using their phone. While the greatest percentage of those who had made some mobile purchase had bought digital goods, at 47%, another 34% had purchased physical goods; 26% had purchased financial products or services; and 21% had purchased other services such as purchasing movie tickets, travel etc. (eMarketer, June 2013)
More than two-fifths of UK smartphone users already use mobile banking, according to a February 2013 survey of more than 10,000 UK internet users ages 16 to 65 from payment services company VocaLink. And as more consumers become comfortable with mobile banking, mobile payments are also catching on.
Nearly one-third of smartphone users reported using mobile payments, and another 32% said they were interested in using such technology. While a slightly greater 37% said they were not interested, mobile payments are still relatively new. The survey's findings suggest that a good chunk of UK consumers are reasonably educated about mobile payments and ready to join in.
The demographic breakdown of mobile payment users showed a skew toward men and especially those in the 16-to-34 age group. Twenty-three percent of male internet users reported using mobile payments vs. 18% of females. And a substantial 41% of 16- to 24-year-olds and 35% of 25- to 34-year-olds also said they made mobile payments. Overall, mobile payments reached one out of five surveyed internet users in the UK.
When it came to types of mobile apps used to make payments, PayPal Mobile was the most popular among UK mobile payment users, at 64%. But mobile banking apps followed, at 40%, showing that mobile banking continues to be an entry point for mobile payments. (eMarketer, June 2013)
Just over a third (34%) of smartphone owners will be ‘very likely' or ‘likely' to purchase more items from their mobile device thanks to 4G technology and faster internet connections, according to a eCustomerServiceIndex (eCSI) survey of 2,000 consumers from eDigitalResearch and IMRG.
39% of smartphone owners have already used their mobile device to make a purchase, a number which is only likely to increase with the introduction of more 4G networks and locations later in the year.
Whilst adoption of 4G technology currently remains relatively low (according to the study, just 14% of smartphone devices have 4G capabilities although not all are currently active), 4G users on average are much more engaged with mobile technology than their 3G smartphone owner counterparts.
Over three quarters (77%) of 4G users have accessed the internet from their 4G enabled device whilst out shopping, compared to just over half (53%) of 3G smartphone owners who have done the same. Meanwhile, 62% of 4G users have used a barcode scanner to see if they could get a product cheaper elsewhere, compared to just 1 in 5 (20%) 3G smartphone owners.
Of those that have 4G technology available to them, and have used it, 43% reported a substantial difference to their internet browsing experience claiming that it was ‘considerably faster', whilst another 39% said they found it ‘faster'. (IMRG, April 2013)
EConsultancy has compiled over 50 stats about mobile commerce in the UK (see here). Below are a selection of the featured findings:
- 69% of tablet owners make a purchase on their device every month, according to data from a study by InMobi and Mobest.
- Around one in ten of these consumers were also happy to use their tablet for ‘big ticket' purchases and over 20% of tablet users claim to shop less in bricks and mortar stores since purchasing their device.
- More than two-thirds of UK mobile owners (63%) have used m-commerce in some form according to data from inMobi. Of those yet to use m-commerce, 45% expect to do so within the next 12 months.
- Looking at what mobile users have purchased; 47% bought digital goods, 34% purchased physical goods, 26% settled a bill and 21% paid for services.
(EConsultancy, January 2013)
The No. 2 smartphone shopping activity in the UK was buying goods or services, at 18% of the smartphone population, according to a July2012 study from comScore. This was more than the percentage who had compared and researched products or found coupons or deals over the phone. And it is a huge jump in mobile buying compared to comScore's findings in August 2011, when making purchases via the smartphone did not make the list of top 10 mcommerce activities.
Mcommerce activities performed by UK smartphone users, July 2012 (% of respondents):
- Found store location: 24%
- Purchased goods or services: 18%
- Compared product prices: 16%
- Researched product features: 16%
- Made shopping lists: 16%
- Found coupons or deals: 15%
- Checked product availability: 14%
In terms of UK mobile shopper demographics, men were in the clear majority, with a 55% share, but this is unsurprising given that smartphone and tablet users skew male. Mobile shoppers were also likely to be middle-income, with over half of mobile shoppers making between £15,000 ($24,193) to £45,000 ($72,580).
Demographic profile of UK mobile shoppers, July 2012 (% of total):
- Male: 55%
- Female: 45%
The average amount spent by mobile phone buyers was similarly mid-tier. Nearly 50% of purchases made over the phone cost between £21 ($33) and £100 ($161).
It's notable that there was one mobile shopping activity in which UK smartphone users seemed comparatively disinterested-among the EU-5, the UK had the lowest penetration of smartphone users scanning QR codes.
By the end of 2015, more than half the population in the UK will access the mobile internet, according to eMarketer. As tablet and smartphone adoption grows, retailers will need to pay close attention to who their mcommerce customers are and what they are buying, and adjust accordingly to a world that is rapidly going mobile. (eMarketer, October 2012)
In Great Britain, nearly half of internet users thought mobile payments would be useful in at least some circumstances, according to a Harris Interactive poll fielded in June 2012.
The survey found that 49% of web users in the country were at least somewhat interested in using their phones as a payment mechanism for transportation. Nearly as many said the same about paying in bars and restaurants or for groceries. Even for major purchases, almost one-third of respondents were interested in mobile payments.
Internet users in Great Britain who are interested in mobile payments, by location, June 2012 (% of respondents):
- Transport: 49%
- Bars/restaurants: 45%
- Groceries: 44%
- Major purchases: 31%
Those figures were especially high considering they were among all internet users-not just those who have a smartphone or other advanced handset that would be necessary to carry out a mobile payment transaction using technologies like near-field communication (NFC). And with smartphone ownership highest among the young, and somewhat more likely among males in older age groups, early adoption of mobile payments seems even more likely.
Demographic profile of internet users in Great Britain who own a smartphone or tablet, June 2012 (% of respondents):
- 40% own a smartphone
- 11% own a tablet
- 16-34: 53% own a smartphone / 23% own a tablet
- 35-54: 42% / 12%
- 55+: 25% / 6%
- 16-34: 53% own a smartphone / 8% own a tablet
- 35-54: 34% / 6%
- 55+: 17% / 5%
eMarketer estimates that in the UK, which includes Great Britain as well as Northern Ireland, there will be 19.2 million smartphone owners by the end of 2012, representing 36.8% of the total mobile population in the country. By 2016, nearly 42 million people in the UK will own a smartphone. (eMarketer, September 2012)
UK internet users have not been slow to adopt mobile devices for shopping (i.e., researching and browsing products) on the internet, but they still prefer to turn to a PC when it's time to buy, research shows.
The preference for purchasing via PC is outsized compared with the tendency of UK users to click on mobile ads. More than 11% of all paid search clicks in the UK in the first quarter of 2012 came from mobile devices (not including tablets), according to research from digital marketing software firm Kenshoo and publishing and events company Figaro Digital. Another 5.8% of paid search clicks came from tablets. Computers accounted for the lion's share, at 82.8%.
In spite of those clicks, however, many UK internet users are probably not converting on their mobile and portable devices. More than nine in 10 said they preferred to buy via PC, compared to 3% who would rather to do so on a smartphone and 2% on a tablet.
Preferred device for marking online purchases according to UK internet users, April 2012 (% of total):
- Laptop or PC: 91%
- Smartphone: 3%
- Tablet: 2%
- Don't shop online: 4%
(eMarketer, August 2012)
The popularity of shopping through mobile devices is continuing to grow at remarkable speed in the UK, with sales through mobile devices penetrating the 5% barrier of total e-retail sales for the first time. In Q4 of 2011 mobile sales accounted for 5.3% of e-retail sales, which has shot up from 0.4% over the space of just two years. This represents a staggering growth rate of 1,320%. Mobile figures include those made through tablet devices. (IMRG, February 2012)
Orange and Barclaycard have launched ‘Quick Tap', the UK's first contactless mobile phone payments service, allowing consumers to make purchases on the high street using their mobile phone. Customers can make purchases £15 and under nationwide by simply tapping their Quick Tap mobile handset against a contactless reader at over 50,000 stores.
Quick Tap will use a secure SIM-based approach to mobile payments, providing a single point of contact for customer care as well as ensuring enhanced payment security for customers. The service will be available to Orange customers who use a ‘Quick Tap' enabled handset. Barclaycard, Barclays debit or Orange Credit Card users can transfer funds of up to £100 simply and securely onto the handset's Quick Tap app, after which the phone is ready to make payments of £15 and under in a single transaction.
The payment app, which sits on the home screen of all Quick Tap compatible handsets, contains information such as electronic statements detailing Quick Tap purchases so customers can keep an eye on their spending and manage finances on the go.
Initially, mobile payments will be accepted at stores nationwide including Pret a Manger, EAT, Little Chef, Wembley Arena, Subway, Wilkinson and McDonalds where contactless payments are currently accepted. (eyefortravel, May 2011)
Almost half of smartphone users (48.2%) have now shopped online and on their mobile, increasing by a dramatic 13% in just nine short months, according to a eDigitalResearch and Portaltech study, which looked into the multichannel browsing and shopping habits of UK consumers.
The research has highlighted that browsing via smartphone (mobile web browser or an app) on a weekly basis has almost doubled to 48.6%, with similar increases for those actually purchasing products via a smartphone from 10% to 19.8%.
Smartphone users who said they shopped online via the internet on a weekly basis increased by over 7% from 29.8% to 36.6%. Conversely, the proportion who said they never shopped online was roughly half of last June's figure, dropping to just 3.2%. Browsing online via the web also increased slightly to 64.8%.
The research demonstrates to retailers the importance of developing both a mobile website and an app, as shopping and browsing across both platforms has increased, with a staggering 30% of smartphone users browsing mobile websites on a regular basis.
Travel and ticketing - historically a sector in which consumers have been quick to adopt the internet for both research and purchase - displays similar trends. Online purchase via the internet stayed constant at around 57%. The trend away from physically visiting travel agent premises continued, with purchases there reduced from 28% to 23%. Bookings via catalogue reduced from 3.6% to 2.7%, but via call centre they increased from 2.8% to 3.7%. Booking via Smartphone app became more popular, increasing from - from 1.3% to 3.4%. (eyefortravel, June 2011)
Mobile commerce was the big news of 2010 with the smart phone technology catching up with the aspirations of the consumer allowing more functionality on smart phones.
Over 40% of people surveyed in the UK had a smart phone with over 20% of those people shopping online for products in October 2010, according to an eDigitalResearch study tracking mobile phone usage. Research over the festive break 2010 has found that 22% of online users accessed the internet via their smart devices on Christmas and Boxing day further confirming the increased popularity and importance of mobile commerce for retailers.
eDigitalResearch also saw the start of a new age of mobileCommerce in 2010 - a fusion of mobile, high street and e-transactions which means that the consumers have the ability to shop however they want, not dictated by channel. For example, consumers may see an advert for a product on TV, check it out online, buy it on their mobile and collect in store. The consumer is now in control of the shopping experience and wants to interact with a ‘brand' and expects the experience to be seamless across each of the channels.
eDigitalResearch says that it is certain that mobile commerce will continue to grow in 2011. (eDigitalResearch For informed direction, January 2011)
Overall, UK advertising spending suffered a double-digit drop in 2009, according to several sources. But the Internet defied this downward trend. UK advertisers spent £3.54 billion ($5.56 billion) online in 2009-5.7% more than in 2008.
Internet advertising will gain momentum in 2010 as the economy inches into recovery, reaching £3.79 billion ($5.95 billion). Slower growth is expected in 2011, but the London Olympics and greater financial stability should bring higher rises in 2012. By 2014, online ad spending will approach £4.84 billion ($7.60 billion).
Search accounted for 60.7% of Internet ad spending in 2009. Display claimed 20% and classified ads 19%, while less than 1% was spent on e-mail sent to purchased lists. Search will increase its share of the pie in 2010 and beyond, as classified ads lose ground. Spending on video and mobile ads will boost the display category.
Telecoms, finance, technology, and media and entertainment firms topped the UK's Internet spending league in 2009. On mobile devices, however, entertainment companies led with roughly 60% of all ad spending. (Emarketer, June 2010)
Last Updated on Saturday, 29 June 2013 20:38