Online stores expect bumper Christmas sales
Online shopping is expected to increase by more than 40 per cent this year compared with last Christmas in a sign that the rapid growth of e-commerce is not yet starting to subside.
The expected rise is in sharp contrast to the subdued outlook for high street retail sales. And threats to one of the main competitive advantages of online retailers – lower prices – are not seen as likely to derail that growth.
Interactive Media in Retail Group, the industry body for "e-tailers", expects 24m British shoppers will spend Pounds 5bn online this Christmas, an average of Pounds 208 each. That is up from Pounds 3.5bn spent online last Christmas and represents an acceleration of the online shopping growth rate. Last Christmas year-on-year growth was 20 per cent.
Online shopping has been increasing rapidly this year. Figures from the Interactive Media in Retail Group suggest it was 40 per cent higher in October than in the same month last year, with 24m people spending Pounds 1.78bn on the web, an average of Pounds 74 each.
"Already we have passed the biggest day last year, which is usually in the first week of December," said Mark Guymer of Shopping.com, the price comparison website. The online growth comes as total retail sales in October increased just 0.3 per cent year-on-year, according to the Office for National Statistics.
A threat to online stores' ability to offer the best deals emerged last week when it was revealed that some electronics manufacturers were pricing goods higher for internet retailers than for their high street counterparts.
But for many consumers, price has long ceased to be the primary reason for shopping online.
Glen Drury of Kelkoo.com, the price comparison website, said: "Several years ago, when online retail was in its infancy, online retailers used low pricing to overcome the trust barrier to buying online. Now the online retail market is sufficiently mature that 20 per cent of the total consumer electronics market sales are now taking place online. People are now shopping online because it's quick and easy and enables them to access a huge range of providers."
According to research by Nielsen/NetRatings, the market research group, convenience is the main reason people turn to online shopping, with 30 per cent of respondents citing this as their main reason for using the web. Only 14 per cent said price was their key reason for using the internet for purchases.
Mr Guymer said his own findings support this. Only 20 per cent of people who searched for products on Shopping.com went on to buy the lowest-priced item. Other factors, such as 24-hour delivery services, can be an equally important deciding factor.
In spite of electronics manufacturers' fears about cut-price internet offers eroding their brand values, research indicates that brands play a powerful role in online shopping.
A study by the Henley Centre, the research consultancy, showed that only 13 per cent of consumers would purchase a product if they were not familiar with the retail brand or the product brand. However, 54 per cent would buy if they knew the product brand but not the retailer brand.
The accelerating growth in online shopping comes as more and more people subscribe to high-speed internet connections that make browsing online shops easier. Broadband now accounts for more than 57 per cent of all UK internet connections.
Mr Guymer said increases in online shopping levels were coming not so much from attracting new users but from existing internet shoppers spending more.
"The average order value has increased by about Pounds 150 over the last year," he said. "Four years ago people were buying mainly CDs and books. Now people are getting Pounds 2000 leather sofas over the internet."
According to Kelkoo, electronic goods such as computers, digital cameras and MP3 music players continue to dominate as the most popular items for online shoppers. The recent launches of Apple's iPod Nano music player, Sony's PSP handheld games console, and the planned launch of Microsoft's new Xbox 360 games console on December 2, are expected to continue fuelling interest in this category.
However, increasing numbers of shoppers are also moving to buying clothes over the internet. According to the IMRG, clothing sales were up 27 per cent in October compared with 2004, while Forrester research estimates that 35 per cent of UK internet users have bought clothing online.
Mr Guymer said online shoppers are particularly comfortable with buying brand-name sports clothing.
He added: "People know what they are looking for. An Adidas or Nike-branded top is going to be the same online as it is in the shops, and so people are turning to the convenience of buying over the internet."
