With Christmas just around the corner in a year that will be remembered for tough economic conditions, are we set to experience another year like 2007 where online shopping accounted for 15 per cent of total ecommerce?
The proliferation of online shopping has come on in leaps and bounds; if you cast your mind back to the early Noughties, online shopping was something the cool kids did. Using your credit card online was a risk you took. Would your goods be delivered? Would your money disappear into thin air? Now, to those who have grown up with the internet at their disposal, online shopping has become second nature whether it is for new songs from i-Tunes or illegal software from Ebay.
Unless you’ve been living in a cave for the last few months, you will have been unable to escape the credit crunch. The heights of a 54 per cent year on year leap in ecommerce that occurred over 2006 to 2007 are unlikely to reoccur. Instead, predictions from IMRG Capgemini e-Retail Sales Index suggest online retail will rise 15 per cent year on year by £13.16bn.
According to IMRG, of the £46.6 billion spent across retail online in 2007, £15.2 billion was recorded in the 12 weeks running up to Christmas. In contrast, this year, figures from Egg suggest that £12 billion will be spent online from the beginning of December up to Christmas. “Consumers are turning to the internet as usual to help them shop their way through tough times,” comments IMRG’s chief executive, James Roper.
According to a study by Jupiter Research, UK consumers are spending 40 per cent more than our US counterparts and are 24 per cent more likely to make their purchases online. The annual Deloitte Christmas Retail Survey predicts British shoppers will spend an average of £655, only 1 per cent less than last year; however 19 per cent of shoppers still intend to spend more. So, despite the tough times, online retail is bearing up well. But who is set to capitalise?
“The list of online winners his Christmas will include fashion, which currently accounts for one in ten visits to the retailers and has been the fastest growing sector this year,” says Robin Goad, director of research at Hitwise. “Supermarkets are also benefitting both from consumers’ quest for cheaper food online and a shift towards selling higher ticket items such as electronics at competitive prices online.”
Consumers have become aware of the bargains available across clothes websites such as ASOS which fared very well in the recent IMRG/Hitwise Hot Shops list where it placed above such sites as Lastminute.com and Expedia. In the run up to Christmas, Amazon faired the best with more traffic than Argos, Play, Tesco and Marks & Spencer.
Comparative research undertaken by comScore revealed Ebay to be the most popular destination for online shoppers whilst Amazon, Apple, Home Retail Group and Tesco trailed behind. It’s significant that both Ebay and Amazon rank highly as online retailers that sell second hand goods as Hitwise revealed recently that UK Internet searches for second hand goods have increased by 22% year on year.
It’s also been an immensely strong year for voucher codes via affiliate websites. Robin Goad argues: “British consumers are hungry for a bargain and searches for vouchers have increased by 133% this year. As a result, shops that offer popular discount vouchers are experiencing notable surges in traffic and voucher-specific websites are now a significant source of traffic for many online retailers.”
Recently the IAB’s affiliate marketing council established a code of best practice for the use of online Voucher Codes to come in to effect on January 1st 2009. “The timely and unified action, highlights the maturity of the market and reassures merchants of the validity of the affiliate channel,” says Dan Redfearn, the IAB’s membership manager.
Another interesting development this year is that fish and chips shops are seeing their highest profits for five years. Consumers are opting for a night in rather than splashing the cash on a night out on the town. One sector to benefit from this trend is the DVD market – with Mama Mia emerging as the biggest winner of all. Over 1.7 million copies of the DVD were purchased on its first day of release, knocking Titanic off the top place to become the fastest selling DVD of all time.
While this should have set the cash registers ringing at most DVD retailers, it couldn’t have come at a worse time for Zavvi, the heir to Virgin Megastores thrown, After the retailer’s, supplier Entertainment UK - owned by Woolworths - entered administration, the writing was on the wall. With hugely popular films (Indiana Jones, The Dark Night) and albums (Take That, Britney Spears, The Killers) released this Christmas, and Zavvi unable to supply customers, the retailer lost out at the most important time of the year – and as a result, the outlook is bleak.
Catriona Campbell founder and director of Foviance argues that the problem was not Zavvi’s fault, but nevertheless will have serious repercussions for the brand. “The damage this will do to Zavvi’s reputation amongst particularly the young will be irrevocable,” says Campbell.
As Zavvi falls victim to these difficlut times, Amazon and Ebay will no doubt continue to prosper. Consumers have embraced online more than any other Christmas. This will no doubt strengthen the bond of shopping online and convince consumers to keep on spending.
