Online spending will top £13bn for the first time this Christmas, according to Sage Pay.
Sage Pay says the rise – equivalent to an 18% boost on last year’s spending of £11bn, as monitored by Sage Pay data – will come as Britons already start to look online ahead of Christmas spending – 2.7bn eBay searches using the term ‘Christmas’ were expected in August – and in a year that IMRG has forecast online retail will grow by 17%.
But the payment processing company warns that small and medium-sized retailers who have yet to move online will miss out on almost £88bn* in festive spending because they do not have an internet presence. At the moment, it says, only 10% of the UK’s small and medium sized businesses are online – and those who fail to join them could find that costly.
“With record online spending predicted for Christmas 2014, it’s never been more important for small businesses to be online,” said Simon Black, chief executive of Sage Pay. “Most larger retailers are already preparing themselves for Christmas, and if independent merchants want to capitalise on consumers’ confidence, they need to follow suit and begin preparing too.”
He said preparations should start by making sure website and payments systems were optimised ahead of Cyber Monday, in recent years the peak online trading day in the run up to Christmas and which this year is expected to fall on December 1.
Black added: “However, an alarming amount of UK SMBs are still not online. This will have a serious business impact not only for Christmas, but in the longer term as the exponential rise in online spending continues.”
Sage Pay is launching a Business Booster competition for startups and small businesses who are online by Christmas, with a £25k prize package designed to boost online sales, including a TV advert, digital ad campaign, a review of digital assets and free Sage Pay payment processing for a year.
• Earlier this month, Mintel researchers predicted that online spending would reach £4.7bn in December 2014, accounting for 13% of all retail sales, which it forecast would come to £36.5bn in total.
* Estimate based on an 18% year-on-year increase in transactions according to Sage Pay’s data on spending of £11 billion in 2013 to £13bn in 2014. Sage Pay’s data indicates SMBs make up 75% of the market, meaning UK SMBs are set to contribute to approximately £9.75bn of this. This was then used to calculate the amount lost by offline SMBs using a combination of the number of SMBs in the UK (4.9million according to the FSB) and those that are offline (1 in 10, or 490,000). 490k online businesses making £9.75bn = £19,898 per businesses on average. £19,898 multiplied by 4.4million (# of offline businesses) = £87.75bn.