Spending on the high street may have weakened during the first half of 2003, but internet shopping has received a significant boost. Online sales in the UK are expected to be worth &£14bn by the end of the year, compared with &£7.6bn last year (MW May 29).
Initially, UK consumers struggled to come to terms with the idea of internet shopping, with concerns such as security foremost in many people’s minds. However, consumers are increasingly turning to the internet to find better value for money than on the high street, as e-tailers are able to pass on their distribution savings, and because the Net offers inspiration when it comes to buying a present for every occasion.
Last Christmas, internet sales hit &£1.5bn, with 8.4 million adults shopping online – an increase of 52 per cent on the previous year. A study by market researcher NOP World predicts that the online market will see dramatic growth again this Christmas.
Consumers are turning to the Net to buy their presents for a number of readily identifiable reasons, such as the ability to compare prices online more easily than on the high street (by using price comparison sites). Using the Net can also save valuable time by avoiding visiting one store after another and gifts can be sent directly to the recipient.
According to research by NOP World for play.com, using e-tracking panel e-Omnibus, adults (16 years old and over) agree that these benefits are a large part of the reason they choose to shop via the internet. The ability to buy presents without having to leave the home or office, deal with traffic or fight for space among hordes of other shoppers is also very appealing.
Companies with online shopping facilities are more likely to benefit from these sentiments during Christmas; that means they will also benefit from the fact that Christmas is a time when consumers are prepared to pay the most for gifts. According to NOP World, consumers are prepared to spend an average of &£110 on Christmas gifts bought online, which is by far the highest amount spent on gifts bought on the Net.
Gifts bought online for wedding anniversaries are the second-most expensive buy at &£46 and birthdays follow closely behind on &£40. Smaller amounts are spent for Mother’s Day and Father’s Day gifts, although it is clear that mums get a far better deal with people spending on average &£21 on them, which is about &£4 more than shoppers spend on their dads.
There is considerable variation between spending thresholds around the country. For instance, respondents from the Midlands spend &£44 online buying wedding gifts – 25 per cent less than their counterparts in the South and 20 per cent less than shoppers in the North. Midlanders make up for the wedding gift at Christmas, when they spend on average &£16 more on online gifts than those in the South and &£7 more than Northerners.
Men tend to be more generous when shopping online, particularly when buying gifts for wedding anniversaries, when they spend &£55 on average – over 40 per cent more than women. Men also spend about &£9 on their partners for Valentine’s Day. The fact that men spend more on gift shopping online could be attributed to the fact women prefer window-shopping and browsing, which means they are far more likely to make impulse buys if they can hold and see products.
The entertainment industry is well placed to benefit from the surge in consumer confidence in online shopping. According to data from a major DVD supplier, 43 per cent of DVDs sold last year were bought as gifts over the internet. This figure is expected to rise to 55 per cent this year – which amounts to 19 million DVDs being bought as gifts online.
One way to appreciate the impact of DVD gift purchases is to evaluate the uplift of sales in this market during the last quarter of the year. Almost half of all DVDs are sold in the last few months of the year, both through traditional retailers and via the internet, and research shows that 66.7 million DVDs will be sold in the run-up to Christmas and about ten per cent of these sales are likely to be via the internet. Music and computer games also sell very well over the internet and are likely to see similar sales patterns around “seasons” such as Christmas.
Although consumers are coming around to the idea of shopping online, NOP World research shows that one in four internet users who do not shop online are still concerned about the safety of their credit card details. This means that even with the significant boost online shopping has already received, there is room for further growth if online companies can move to quell consumer fears.
The e-Omnibus study was conducted with 1,003 weekly adult (16-plus) internet users and weighted to match the weekly UK internet user profile. The sample was drawn from NOP World’s online panel of more than 40,000 UK internet users