eCommerce in the UK

Most industry analysts agree that although the UK is well placed in comparison to other European countries in terms of eCommerce, they are as much as eighteen months to two years behind the US.  This lead is enough to give the US dominance in the new economy.  The good news for the UK is that most of the major UK companies are very IT-aware, and should be able to withstand this threat.

 eCommerce and the internet lower the barriers to entry, creating a global marketplace.  An internet presence is essential to show that a business if forward-looking and in touch with customers.  It also creates an opportunity for a business to restructure by cutting out intermediaries, or by selling directly without any physical premises.

 In a study conducted by the NOP Research Group, a British consulting firm, the results showed that almost 1.5 million adults in Britain used the internet during the four weeks prior to June 1999 for purchases totaling more than £239.  Additionally, they found that one in five (21%) of the people who used the internet during the first six months of 1999 used it for home shopping, a significant increase over the 8% during the same time period in 1998.  They also found that one in ten internet users said that they already have a Digital TV, and a further 34% said that they were certain or likely to get a Digital TV in the next twelve months.

 The NOP study showed that total eCommerce in the UK was predicted to reach £9.5 billion during 2000.  These figures may have to be adjusted according to a recent article in the Financial Times.  This states that ?The rate at which new business and users are joining the internet may have slowed in the US and, according to the latest report by Continental Research, is starting to in the UK too.?[1]

 The use of the internet typically goes in four sequential stages: access (getting connected to use email, access to the web), presence (setting up a site on the World Wide Web, primarily for marketing communications purposes), integration (integrating existing business systems with internet technology such as connecting internal databases to your Web site or setting up an intranet) and enablement (full blown electronic business such as selling goods or services over the internet or conduction business with suppliers or business partners using internet technology).  An increasing number of companies are at stages one and two, while some are even moving to the latter phases which is where they really start to see concrete business benefits.[2]
The UK has taken a proactive stance when it comes to eCommerce.  They have participated in studies on the ease of use of eCommerce, as well as looking at the adaptation of eCommerce and its impact on the national economy.  eCommerce is defined by the UK as any business process carried out over an electronic network, such as exchanging data files, having a website, using other businesses? websites or buying and selling goods online.

 To accomplish the changing paradigm of adoption of eCommerce in the UK, they have developed three targets to ensure that all businesses in the UK are joining the ?new economy.?  The first target is: To ensure that 1.5 million micro, small and medium-sized businesses are online by 2002.  Target two: To ensure that 1 million micro, small, and medium-sized businesses are trading online by 2002.  Target three: To ensure that the performance of the UK?s micro and small businesses is up with the best in the world.  This will be accomplished through the use of an adoption ladder; a six-step process that includes the following steps: 1) Messaging [includes email and some forms of EDI], 2) Online marketing [businesses publishing websites for information about products or services], 3) Online ordering [online placement of orders between businesses and customers], 4) Online payment [contains two parts ? issuing or receiving an invoice and completed by online payment including credit/debit card, electronic cash, electronic funds transfer or through EDI service], 5) Order progress/online sales support [the use of eCommerce to support business relationships between customer and supplier], 6) E-business [the integration of all the previous activities with the internal processes of a business through ICT (Information and Communication )].  The level of use of LANs and WANs in the UK compares favorably with that of other countries, and although the adoption of intranets and extranets are gaining in use, that level is lower than in a number of other countries.

 Current levels of eCommerce indicate that only about 3% of all businesses are totally reliant on eCommerce in the eight benchmarked countries, however the UK is second only to Sweden in the use of some form of eCommerce in business, with 70% of all UK business having implemented some form of eCommerce.  Studies show that 24% of the remaining 30% intend to implement some form of eCommerce in the future, bringing the total use of eCommerce to 94%, with only 6% of businesses showing in intention of going toward eCommerce.

 The UK identified two main drivers toward eCommerce: cost/efficiency drivers which include increasing speed with which supplies can be obtained, increasing speed with which goods can be dispatched, reduced sales and purchasing costs, and reduced operating costs, and the second driver: competitiveness drivers which include customer demand, improving the range and quality of services offered, and avoiding losing market share to businesses already using eCommerce.  They also identified some inhibitors to eCommerce which include: no tangible benefits, eCommerce is not relevant to the business, technology costs are too high, concern about fraud, concern about confidentiality, telecommunications infrastructure, and credit card clearing.
 A study by the British organization Interforum concluded that the two most commonly cited reasons for business to hesitate in adopting eCommerce are security and lack of bandwidth.  The majority of business and consultants interviewed believed internet trade was not secure.  Measures taken in the past two years, however, have made internet transactions among the most secure.  Another security issue is the protection of mission critical data.  Firewall technologies have addressed this concern.  The second largest concern of those interviewed was the lack of available bandwidth.  They believed that the internet was too slow for business transactions.  These concerns are constantly being addressed by the ever-evolving speed of computers, initiatives such as the Internet II project by the US government, and cable companies relieving congestion through the use of digital broadcast channels, providing internet access.

 The UK also views eCommerce as a global issue.  They participated in a study involving 17 countries, which explored the viability of the current eCommerce situation.  Since items can be viewed on the internet globally and purchases can be made relatively easily over the internet, consumer groups from these 17 countries ordered various items from a variety of sites within their own countries and from abroad.  The results showed that there are several issues that must be taken into consideration from ease of use to locating specific items worldwide.  The study looked at ordering policies, delivery times, ease of making returns and speed of refunds, as well as security and privacy concerns.

 Various consultative documents have been issued by the Department of Trade and Industry.  Net benefit: the electronic commerce agenda for the UK (October 1998) establishes some consumer and data protection principles, generally confirming that existing UK legislation covers internet transactions.  The Office of Fair Trading issues extensive guidance to consumers on how to use the internet for shopping safely.[3]

 The UK has also determined certain regulations for returning goods purchased over the internet.  These are: ?Goods must be as described, of satisfactory quality and fit for their purpose; otherwise the consumer has the right to reject them.  These rights apply to goods bought in a sale as well as at full price.  Many traders also allow the consumer to return or exchange goods for other reasons, so long as it is within a short time span (often seven days). [4]

Basic facts for eCommerce in the UK[5]
 
 

	End of 1998	End of 1999
eCommerce market (EURO Million)	1412	4581
eCommerce spending per 100 inh (Euros)	2390	7732
Number of eCommerce users	1,000,000	3,197,000
Number of eCommerce users per 100 inh		5
Number of eCommerce users/Total number of internet users		23

 
 
 
 
 
 
 
 
 
 
 
 

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