Online retail sales in the UK totalled £5.2 billion in April, rising 19 per cent year-on-year as the good weather and plethora of bank holidays encouraged people to splash out on seasonal fashion lines, food and outdoor equipment.
According to the IMRG-Capgemini e-Retail Sales Index nearly £60 billion was spent via the internet in 2010 and this figure is expected to grow even further in 2011 as consumers increasingly see the web as a cost effective and convenient place to shop.
The huge sales potential via this ever evolving channel has been clear to see for over a decade now, and the importance of e-commerce and the internet in terms of globalisation is highlighted by today’s meeting of leading e-tailers and internet entrepreneurs in Paris.
Bosses from Google, Facebook and Skype, as well as retail representatives such as Amazon CEO Jeff Bezos, are among the guests at the e-G8 meeting hosted by French President Nicolas Sarkozy, where all internet-related issues will be discussed.
Despite the widely acknowledged importance of the internet in terms of the global economy some retailers have been slow to establish themselves in the space, and there are others such as value fashion chain Primark yet to even launch a transactional site.
Russ Carroll, UK Country Director at eBay-owned price comparison website Shopping.com, says that this is soon set to change.
“The internet will continue to play a key role in influencing purchasing decisions, whether this results in people buying online or in-store - there’s such huge potential for multichannel retail,” he tells Retail Gazette.
“I’m sure Primark has been reviewing the situation. I personally think they’ll launch a transactional site sometime in the near future because similar stores, such as Matalan, already have them.”
More fashionable retailers such as H&M, Zara and Gap only joined the online transactional party at the end of last summer, and recent figures suggest that they are players in one of the most popular internet shopping channels.
IMRG-Capgemini data indicates that e-tail clothing sales increased by 32 per cent year-on-year in April, highlighting the greater choice and better service fashion companies now offer customers online. Such success does, however, beg the question why such big name companies took so long to start selling their wares on the web.
“H&M, Zara and Gap are high street success stories,” explains Carroll.
“Their websites initially took the role of increasing brand presence as they established themselves in the UK, but like any smart businesses they will have studied the industry data to find out where sales revenue was going.
“It then made complete sense for them to get into the transactional space.”
The e-commerce boss said Shopping.com’s figures reflect those published elsewhere, with growth in internet sales via the portal apparently coming from categories such as clothing and health & beauty.
Home & garden products and items for babies and kids are also described by Carroll as online “boom categories”.
“New entrants into the online market are a real indicator of e-tail’s growth potential - around 85-90 per cent new merchants coming online are within these categories,” he adds.
“We have signed big names recently like Debenhams, House of Fraser and Marks & Spencer, which are standout performers in online fashion.”
Carroll only joined Shopping.com in December last year, but is well qualified to analyse the internet retailing sector having previously held senior roles at shopping community websites LetsBuyIt.com and PriceGrabber.co.uk in the early stages of the dotcom boom at the start of the last decade.
He has seen e-tail evolve over the last eight years from businesses not even having shopping baskets on their websites to the “sophisticated affair” of hourly product and price updates that we see today.
There are more areas of change on the horizon too. Despite some specific areas of online retail such as fashion and home & DIY benefiting from the recent sunshine, Carroll notes that hot weather and the summer have a negative impact on web sales.
“Whenever there is a hot spell, traffic tends to drop off around ten per cent because people are out and about enjoying themselves – we see that in our stats.”
But this will not always be the case. “With increased smartphone adoption and advances in technology there’s no reason why that should always remain a fact,” he argues.
“In the future I expect the summer slump will not happen. The landscape could change slightly and there may even be summer spikes in online usage.”
It appears advancements in new technology will only further fuel online retail’s rapid rise, driving sales and increasing convenience for shoppers in the process.
Whatever findings or strategies that arise from the meeting of e-commerce minds in Paris this week, one thing for sure is that retailers slow to enter the internet highway are at risk of being left behind.