Online shopping turns 20
11 August 2014 marked 20 years since the world’s first secure ecommerce transaction took place. Emma Herrod looks at how the market has since shaped up.
Twenty years ago, online shopping was a novelty that only a few early adopters had tried. On 11 August 1994, what is considered to be the first secure online purchase took place with a copy of Sting’s ‘Ten Summoner’s Tales’ album bought for $12.48 plus shipping on NetMarket in the US.
20 years on, Ofcom stats reveal that it’s now the UK that is the global online shopping capital with more spent per capita than any other country with Brits spending £91bn online last year, according to Capgemini. While reports vary on the number of us shopping online, figures range from 74% to 95% with one in four online shoppers doing so at least once a week.
Despite the 20th anniversary, Brits – on average – first dipped their toe into the brave new world of online shopping just nine years ago (2005), though 12% were already shopping online before the turn of the century. Back then, the first purchases were most likely to be books, whereas in 2014, the most recent online purchase is most likely to be fashion.
Books (64%), clothing and accessories (60%), music and entertainment (56%) electronics (54%) and holidays and travel (50%) top the list of the things we buy online today according to research by multi-brand digital retailer Shop Direct.
A third of our clothing and footwear purchases are now done online. We buy more than a quarter of our furniture and homeware this way and almost 40% of electrical products are bought via a PC, laptop or mobile device.
Online purchasing is set to continue to grow with figures from IMRG predicting that online shopping will, for the first time, break the £100bn a year mark in 2014.
The latest figures from the IMRG Capgemini e-Retail Sales Index have revealed that online sales are back on track following a disappointing end to the first half of its yearly index, which recorded an annual growth of 14% in July. The Index grew 3% month-on-month, which is a stark contrast to the 5% decrease experienced between May and June. An estimated £8.1bn was spent online; a significant increase on the £7.1bn spent during the same period last year.
Adding to recent evidence of consumer confidence in the economy, the travel sector recorded its strongest July performance since 2010; 13% year-on-year. This also follows four consecutive months of single-digit annual growth, averaging at just 5%. This return to growth in ‘big-ticket items’ was also seen in the Electrical sector which, following a year-on-year increase of just 7% in June, shot up to a significant 19% in July; shaking off its post-World Cup slump.
Another sector that recorded impressive growth during July was Home & Garden, which recovered from its unspectacular 8% growth in June, to a very solid 17% in July. This was no doubt helped by the warm weather; the driest July since 2006.
Adgild Hop, Head of Retail Consulting UK at Capgemini, comments: “The return to growth this month will be much welcomed by the UK’s retailers. Earlier results this year had suggested that British shoppers weren’t averse to spending but just reluctant to splash out on the more expensive luxuries. With the recent positive noises about the UK economy, this month we have seen that consumer confidence appears to be improving, with a strong increase in big-ticket transactions in Travel and Electricals in particular. Retailers will no doubt hope to see this trend continuing for the remainder of the year and into Christmas.”
The BRC and KPMG also report strong figures for non-food online sales in July with growth at 14.9% over the previous year, roughly in line with the 12-month average of 14.7%. This long-term average represents a clear acceleration over this time a year ago when the 12-month average was 9.9%. Momentum has built throughout the year thanks to increased use of mobile and tablets, click & collect and more sophisticated websites.
As a result of the sustained higher online growth, the proportion of July online sales was 16.7% of total UK non-food sales up 1.4 percentage points from July 2013.
Helen Dickinson, Director General, British Retail Consortium, comments: “July has seen good online growth and, for non-food products, one in every six pounds is now spent online. The figures are somewhat flattered this July as last year online activity was low due to successful sporting activities attracting people to other types of screens. Nevertheless, online sales of furniture and toys looked particularly healthy.
“Established websites are capitalising on their client base by partnering with other retailers, therefore becoming a favourite destination for a larger range of products.
“Online retail sales contributed generously to the growth of non-food retail sales. On a three-month basis, it was the highest recorded this year and almost matched the stores’ contribution.”
David McCorquodale, Head of Retail, KPMG, said: “Despite the glorious sunshine, retailers managed to capture shoppers’ attention online through the use of targeted and innovative digital campaigns, linking products to holiday plans, festivals and sporting events taking place across the UK. This clever use of customer data and technology paid dividends for the sector, with non-food online sales soaring to record levels.”
Over 20 years, ecommerce and mobile technology have empowered consumers as they are no longer restricted to particular goods and services from one retailer or locality as they can shop around different brands and even in different countries at their convenience. “A revolution in value, pricing and delivery over two decades means that today we can enjoy Sting’s ‘Ten Summoner’s Tales’ album online for free on Spotify,” comments Roger Brown, CEO for personalisation company Peerius. The other side of this, of course, is that traditional record stores have all but disappeared.