Report: UK E-Commerce Set To Explode

Online consumer spending in Britain, Wales and Scotland will soar from $2.6 billion (US$) in 1999 to over $30 billion by 2005, according to Fletcher Research, the UK arm of Forrester Research (Nasdaq: FORR). The report, “UK Online Retail: From Minority to Mainstream,” indicates that wireless devices and interactive TV will fuel the trend.

Online sales in the United Kingdom will account for 7.5 percent of the UK retail market in 2005, a significant rise over a 0.25 online market share in 1999, according to the report.

The predictions by Fletcher are in step with other industry analysts who predict that the United Kingdom and Germany will be central players in an Internet shopping boom in Europe over the next decade.

The report predicts that online spending in leisure travel and computers will lead the surge. UK consumers will spend $748 million online for leisure travel products and some $625 million on computer-related products this year, the report predicts.

Early e-commerce stalwarts like booksellers — particularly Amazon.com, the largest e-commerce store in Europe as well as the United States — will also continue to do well, the report says.

Fletcher also singled out the online grocery market as one to watch, as UK brick-and-mortar giants like Tesco jump onto the Web.

Banking On Wireless

While lagging behind the United States in a number of key areas, the European Internet has the built-in advantage of a sophisticated wireless device market, and it will utilize that strength in the future, Fletcher predicted.

Unlike the United States, where the use of wireless devices is limited to concentrated pockets and demographics, handheld wireless use in countries across Europe is widespread. Its use is increasing in the United Kingdom as well, and new innovations are expected to bring Internet access to a wider demographic.

Fletcher also said that UK online retailers will beef up their customer relationship management (CRM) services in the future and move beyond rudimentary levels to focused personalization and search capabilities.

Barriers Still in Place

Still, there are fixed barriers to online retail in Europe, and the United Kingdom in particular, that need to be addressed, Fletcher says. The European Union estimates that only 12 percent of European households are wired to the Internet, compared to approximately 50 percent in the United States.

Local rules governing Internet access present prohibitive barriers to e-commerce across the unified European Union. Officials say that the Union will need to develop a standard for language translation throughout the continent in order to fully capitalize on the Internet’s potential.