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Despite the disadvantages and the dotcom crash, the advantages are driving a growth in e-Shopping in the UK, at least in certain categories. Sales had reached £3.3 billion by 2001. It was forecast that ‘most people’ will buy groceries, books, CDs and even clothes by e-Shopping, making up 10 per cent of total shopping by 2009. It has been forecast that 94- per cent of e-Retailing will be at the expense of the high street, with only 6 per cent arising from incremental growth (Gibson 1999; Prefontayne 1999; RICS Foundation 2000; Verdict 2000, 2001, 2002).

According to Verdict, in 2001 grocery would account for half of all e-Sales — £1.3 billion, which sounds massive, but accounts for only 5.6 per cent of groceries. The market leaders in their sectors were Amazon (books, plus CDs and videos), Tesco (groceries), Dell (computers) and Next (clothing). Average spend has risen faster for men (+15 per cent) than women (+5 per cent), leading Verdict to comment that ‘the proliferation of female-orientated sites . . . have failed to motivate women to shop significantly more’. The proportion of e- Shoppers preferring to shop from e-Sites run by high street retailers rather than Internet-only is soaring (up from 22 per cent in October 2000 to 33 per cent in April 2001). The main service is travel, and the main virtual product is sex (pictures and stories) — often absent from published statistics, but accounting for around 10 per cent of e-Retailing. In the words of The Virgin Internet Shopping Guide, ‘However much you may despise the sex industry, it has been almost solely responsible for driving forward the revolution in online shopping.’

THINK POINT

If people can e-Shop easily, why should anyone use the high street?

Mini case study: AMAZON

The US-based company Amazon is well known as the world’s biggest e-Retailer books, head to head with Barnes and Noble for the title of the world’s largest bookstore, even though Amazon sells online only. From a start-up in 1995, annual sales have grown to more than $1 billion and the company has 2.5 million customers — but reported its first profit only in 2002. Other products include CDs and videos The UK site (www.amazon.uk) was formed in 1998 by the takeover of Bookpages, and the UK is now Amazon’s biggest market outside the USA.

Amazon.co.uk followed the US parent’s example of using heavy (non-electronic) advertising to promote brand awareness. Traffic to the site is encouraged using the affiliate system. For example, popular search engines such as AltaVista offer links to books related to the key words. The site is user-friendly, enabling e-Shoppers to find books quickly by title, author or subject. Users can find their title in second from a few keywords. Synopses and contents lists are provided, along with a list of other relevant books. Amazon keeps a record of customers’ preferences and advises when new books likely to be of interest are published. One of the main selling propositions is a discount of up to 40 per cent — but such deep discountin made it hard for the company to reach profitability.

Amazon is renowned for customer service, security and fast delivery

Mini case study: DELL

Dell (www.dell.com) has been a pioneer in telemarketing and direct selling since the late 1980s, demonstrating that a complex product like a computer could be sold without face-to-face contact. Much of the success has been due to investment in staff training and customer service systems: ‘We will use our employees to deliver the personal touch that many customers desire — you do not need physical contact to do that.’ The company was one the first e-Retailers and is the market leader worldwide for computer hardware. Dell does not use high street stores, but remains dual channel: via telesales and the Internet.

Source: Adapted from de Kare Silver (2001)

NON-COMPUTER E-RETAILING

It has been forecast that a high proportion of e-Shopping will be by other than desktop computer means, for example using interactive television and TV Internet. The biggest growth area is likely to be in m-Commerce following the launch of third-generation mobile devices. m- Commerce has been forecast to reach 25 per cent of all Internet transactions by 2003. In Japan, i-mode m-commerce technology has already taken off exponentially: 70 per cent of the population have a mobile, 60 per cent of those have i-mode (14 million subscribers) — and e-Retail in Japan is already at 10 per cent of total retail sales. Users can program their likes and dislikes — very popular for meeting people, but also successful in generating m-Shopping business (Yoshida 2001). In the UK, AvantGo (www.avantgo.co.uk) is the market-leading content provider, with a wide range of information and m-Shopping, including books, CDs/videos, computers travel, electronics and clothing.

THINK POINT

Interactive digital television enables e-Shopping without a PC, potentially doubling the e-Shopper customer base. Could this development spell the end for the high street retailers most vulnerable to e-Retail competition?

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