A nation of online shopkeepers


Google’s latest report into the UK’s online industry has thrown up some interesting revelations about British business, and the future of the digital economy in this country.

Worth £100bn and making up 7.2% of GDP, the UK online economy is booming, and looks set to rise by 10% by 2015 according to Google and Boston Consulting Group’s “The Connected Kingdom” study.

The UK came in sixth in the study’s “e-intensity” index, which measures “the depth and reach of the internet commerce in society” among the OECD nations, ahead of likes of the US and Germany.

According to the report, if the online economy was a separate sector it would be the fifth largest in the UK behind real estate and business services (23% of GDP), manufacturing (12%), wholesale and retail (11%) and financial services (9%).

This is encouraging news in what could be bleak winter months ahead for the UK economy following government spending cuts and the impending VAT increase from 17.5% to 20% in January.

It is also worth noting that the combined £363.5bn revenue brought in by business-to-business e-commerce and online advertising are not included in the GDP calculations – meaning the news is even more positive than the topline figures indicate.

The report points to several sectors – media, travel, insurance and fashion – where the internet is transforming UK businesses and creating new jobs.

This is particularly evident with SMEs where the research shows those small businesses that are more active online are more successful, grow more quickly and reach wider markets than their peers.

Of SMEs with a high web usage, search engine optimisation, email and online advertising were the top uses, shortly followed by website comments from customers, proving that marketing as well as customer service is fuelling online success.

The report recommends that companies large and small embed the internet “in all aspects of their operations”. But then I guess you would expect that from Google – it has a vested interest in growing the internet economy.

The point is that by learning about new technologies and adopting digital marketing as part of their business models, SMEs can serve new markets and segments that otherwise may have been closed to them.

Savvy marketers have known for a while that digital platforms allow SMEs to enjoy the benefits of larger companies.

Digital platforms allow small companies the opportunity to expand geographically, deliver cost effective and measurable online advertising and create enriched customer relationships through social media and e-marketing. All without the outlay of traditional marketing and expense of creating a multinational infrastructure.

However the report does highlight that despite online growth, the UK has a lot of catching up to do in terms of broadband capacity and adoption.

“Government needs to encourage consumer adoption, ensure access to infrastructure which is ubiquitous, fast, reliable, and secure, and remove barriers which prevent companies from transforming their business,” the report says.

As a nation, we’re very good at innovation and creativity, but traditionally not very good at infrastructure and speed (perhaps I’m just making natural parallels between the online world and transport here).

What the report does is present the current government with a clear message that failing to deliver a fast and reliable broadband service will not only impact consumers, but businesses too, perhaps in ways that it might not have previously considered.

The world is connected and the world is consuming online. Let’s hope our nation of online shopkeepers are given the bandwidth to do the job.

To read more on The Connected Kingdom, go to www.connectedkingdom.co.uk

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