The market for online shopping is growing at a remarkable rate. Approximately 87% of U.K. consumers have bought at least one product online in the last 12 months, and the United Kingdom is second only to Norway for making e-commerce purchases in Europe. Across the world, nations such as China and the United States are the biggest online buyers, but other countries are catching up. In the coming 12 months, the market potential for British e-commerce is expected to improve dramatically. According to data from the Office for National Statistics, online sales increased by 21.3% during 2016 and should reach 30% by 2017’s second half.
Below are some of the key statistics and trends in the e-commerce sector in 2017, including predictions for the year and early reports on first-quarter performance. Expect consumers to place a greater reliance on mobile for buying and to see a growing demand for mobile apps and new buying technology as we move into the later part of 2017. Take a look at some of the year’s most important statistics and their key takeaways.
What are people buying online?
The most common purchases made online are for electronics and digital media, including video games, music downloads, e-books, computers and phones. The next sector is the fashion industry, with clothes and footwear accounting for almost one-third of online purchases. Forty-eight percent of people buy their groceries online, and 11% do all of their food shopping through an internet device. On mobile phones, however, it is still app spending - purchases to download content or in-app spending for additional features - which overtakes retail purchases as the main choice.
Other important online retail sectors:
â— Transport and travel services
â— Wellness and beauty
â— Cars, vans and bikes
â— Stationery and work supplies
2017 has already seen a growing demand for retail-based technology, which makes online shopping easier. Leading the way in this sector is Amazon (AMZN, Financial), which has produced physical "reorder" buttons for common household items along with virtual app-based versions. Expect more online retailers to take this route and produce handy gadgets to assist with shopping.
Making buying decisions online
When it comes to marketing, product reviews are crucial for brands who want to make an impact on their audience. Sixty-eight percent of women say they consult product reviews before making a purchase, while 56% will look at social media pages or ask contacts on social networks for advice. The same study also revealed the top influencing factors when relying on a review:
â— Review quality and overall content
â— Star rating or mark
â— Quality of attached photographs
â— Time and date of review
If buyers do make a purchase decision, reviews still come second to product quality and to the price of the item. Value is still very important to consumers. According to a VoucherBin study, 81% of consumers have used a voucher code to make an online purchase in the past 12 months. Almost three-quarters of respondents have used vouchers to buy takeaway food online, while 47% have made use of a discount code for clothing and footwear purchases.
The importance of mobile for e-commerce
Mobile buying will continue to increase in 2017, according to industry analysts. The tipping point for mobile was reached in the first quarter of 2016Â and currently accounts for just over half of all online purchases. This makes the online retail market a very desirable and profitable one to be in. Studies show that by 2018, 18% of all retail sales will take place online and by 2040, it is thought 95% of purchases will be facilitated by e-commerce. If these transactions are happening on mobile devices, companies will need to be ready to meet the demand and to step up their mobile sales efforts.
When the Christmas sales figures landed in January, mobile sales accounted for 42.3% of all purchases made - creating a value to the retail economy of 8.8 billion pounds ($10.7 billion). An Adobe study found that for every 10 pounds spent online during the holiday season, 4.10 pounds came from mobile purchases. By Christmas of this year, economic analysts are predicting the balance will tip and mobile will account for over half of holiday spending.
Retail predictions for 2017
There is no way of knowing exactly how this year will play out for the retail sector in the U.K. The country will face some uncertainty when the move to leave the European Union begins. Retail spending actually rose in the later part of 2016, perhaps encouraged by an uncertain pound and overseas buyers looking for a British bargain. This economic recovery, however, has trailed off for now and financiers are being more reserved in their predictions for 2017. Should wage inflation take effect after Brexit, retailers can expect a "bumper year"Â ahead of them. If wages drop instead, as is also likely, it is retailers who will be hit hardest if consumers cut out unnecessary costs.
Online shopping might not be hit as hard as physical stores however. Selling online gives even the smallest retailer access to a huge international market, so many of these companies might be able to weather the storm and continue being profitable. On the other hand, if the Brexit effect does not kick in, then the online retail market is only going to get stronger. Consumers want the convenience, affordability and range of choice online shopping gives them, and mobile puts access to this easy shopping experience at their fingertips. Expect retail's reliance on mobile to grow even more over the next year.
Disclosure: No position in stocks mentioned in this article.
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