In our new Ecommerce Platforms Buyer’s Guide, one of the highlighted trends was the continued growth of the ecommerce market in the United Kingdom.
This has been the driving factor for increased spend on the technology and services that facilitate online and multichannel commerce.
Each person spent on average £1,083 per year online in the UK during 2011, an overall rise of 14%. This trend sits in line with an earlier report by the Boston Consulting Group that predicted that 24% of all UK consumer retail spend will be online by 2015.
Ecommerce Market Value Per Head (£):
So why does the UK lead the rest of the world?
The English language provides a competitive advantage
With much of the technology powering ecommerce coming from the US, the UK has a natural advantage in terms of the speed of adoption of the latest technology. When technology firms decide to ‘cross the pond’, the easiest location in which they can settle is the UK (or Ireland) simply due to the lack of language barriers.
Marketing collateral, processes and procedures do not need to be translated, and it is relatively easy for someone from North America to quickly understand the characteristics of the UK marketplace.
In addition to this, with English being the world’s most popular second language, shoppers looking to purchase from countries abroad are more likely to use websites that are in English if they cannot find one in their mother tongue.
This is likely to be the primary reason why the UK is the market of choice for Nordic online shoppers purchasing items from abroad, accompanied with the presence of strong, reliable and established ecommerce players such as Amazon choosing the UK for much of their operations. This makes the UK a net exporter of ecommerce goods and services.
The size of the UK provides logistical efficiencies not present in the USA
The USA has over 39 times as much land as the UK, and its population density is over seven times lower. Therefore the average distance that goods have to travel inside the country to reach consumers are far greater in the US than the UK.
Because of this, and the fact that the UK has a universal pricing system for postage (i.e. it costs the same to send an item within the country regardless of its final destination), the cost of shipping is lower and provides a greater incentive to buy and sell goods online.
It also makes it easier to provide a multichannel shopping experience. Small distances mean that it is easy to move stock to provide Click and Collect or Click and Reserve options, details of which are outlined in our How the Internet Can Save the High Street report.
Early and widespread use of debit cards has facilitated the growth of the online economy
Consumers in the UK are far more comfortable and likely to pay using plastic than many other countries, and the UK has had cards since 1966 beginning with the launch of the Barclaycard.
Today over 48% of UK retail sales are paid for using debit cards (i.e. charge cards). This is in stark contrast to other countries in Europe which have a greater preference for the use of cash by consumers.
Even though payment mechanisms to facilitate ecommerce have now emerged in cash-centric European markets (as detailed in a report by the European Payments Council), the existing prevalence of plastic has given the UK a strong first-mover advantage.
Distance selling regulations and quality customer service provide consumers with trust
One reason that customers in the UK have confidence in online shopping is the fact that the Distance Selling Regulations have made it a legal requirement for companies to accept any returns from customers providing they sent the items back within seven days of receiving them.
This means any company selling products online in the UK must offer returns, and in an attempt to ensure high levels of customer satisfaction, many offer free return shipping and provide consumers with a period longer than the statutory minimum within which they can return goods. This breeds trust in online companies which may not occur in countries without such strong statutory protection.
High rates of technology adoption and low costs of internet services lower the barriers to ecommerce
The Ofcom report highlighted that as well as spending the most online, UK consumers pay the least for their communications services and use the most mobile data.
This, combined with the fact that the UK has one of the highest smartphone penetration rates in Europe, further contributes to the mix of factors that makes the UK such an ecommerce success story.
Source: Our Mobile Planet
What do you think makes UK ecommerce so successful?
Have you got any other reasons why the UK leads the world in ecommerce? Do you think there are any emerging markets worth serious consideration? Or do you see any serious risks to the growth of ecommerce in the future?
Share your thoughts below.