E-commerce drives UK Web growth

E-commerce has overtaken communication as the driving force behind the Web’s growth in the UK, according to the “UK Internet survey 2000” by Fletcher Research.

In 1999, the majority of companies (59 per cent) were using the Web primarily to communicate with consumers, employees and investors. Today, almost half of all sites attempt to exploit the e-commerce opportunities afforded by the Web.

Fletcher’s report also asserts that the relative youth of the UK Net industry means large, long-established companies are not necessarily disadvantaged by Web-based start-ups. And although competition is fierce, many big businesses are moving sufficiently quickly to secure online success.

Rebecca Ulph, senior analyst at Fletcher Research, comments: “Strong competition from FTSE 250 companies has not given stand-alone businesses an easy ride. If anything, UK corporations have put up strong competition to Web-based start-ups.”

Fletcher also sees the UK remaining an attractive market for established US Web businesses. The report states: “A great many stand-alone UK Web businesses operating are extensions of successful US businesses.” Amazon, for example, controls over half of the UK online book retailing market. But as yet, UK-based start-ups “have made little impact” and the UK market has only a small number of standalone Web businesses – such as Freeserve, First-e and BOL – attempting to compete with bricks-and-mortar companies.

The report goes on to highlight the growing importance of customer service online. “As UK Web businesses increasingly seek to capitalise on e-commerce and lock-in customer loyalty, the quality of that customer experience is of paramount importance.”

Fletcher notes that 85 per cent of sites “now offer some sort of interactivity”. User-generated content has doubled as sites realise the advantages of fostering a community and with it, customer loyalty.

The use of “cookies” is also on the rise – 53 per cent of sites have them, and 43 per cent employ some type of registration.

The bad news is that costs associated with websites are also rising rapidly. It now costs about &£1m to set up a competitive commerce-enabled website, which is more than double the figure of a year ago. And the cost of maintaining a site is “skyrocketing” – up by an average 160 per cent to &£590,000 a year. This figure is a bit worrying, says Fletcher, since “site traffic is not increasing in line with these increases in costs, which could indicate some misapplication of investment”.

Few sites run their entire Web operation in-house – just 11 per cent of the companies surveyed by Fletcher claim not to outsource any aspects of the running of their website.