What country has the largest per capita consumption of goods via online channels? To my American friends, this may come as a shock, so please have a seat. The United Kingdom was recently reported to have the largest spending per capita via eCommerce channels, estimated to be £100 billion , or over 7% of the GDP. That’s a signifcant percentage and one that is well poised for growth. Analysts also predict that eCommerce will continue to grow at rate whereby it will account for 10% of the GDP by 2015.
So what drives UK consumers to purchase online more so than other consumers? There is speculation that since the UK is missing a proliferation of big-box retail outlets like WalMart and Target, Brits must go online to find really good deals. I can sympathize with this a bit as a recent excursion to Debenhams in London in search of a new pair of shoes, left me heading back to my hotel on the Tube in the same old tired pair of “obviously American” dress shoes. The prices in the store weren’t astronomical, but they were certainly higher than prices in comparable stores in the US. Much of this I’m sure is attributable to the current value of the USD, but it’s also likely to do with the simple cost of doing business in the UK as a brick-and-mortar retailer. While the store didn’t have my size or my preferred color of shoe in stock, they did have a constantly blaring in-store advertisement touting the new Debenhams iPhone app. Looks like eCommerce offerings have become a brick-and-mortar products worth pushing!
The United Kingdom is fast becoming a nation of smaller retailers that suddenly have global reach. It is now more feasible for a small to medium size shop to compete with High Street retailers and, because of the proliferation of services to help smaller concerns deliver effectively to their buyers, they may be becoming the UK’s new favorite shopping outlet. This, compounded with the fact that the UK’s eCommerce vendors shipped three times as much out of the country as they did within the country, explains the phenomenal growth in eCommerce in the UK.
Does the UK have a better understanding of how to handle international eCommerce within the EU than other countries (see recent post “Burdened by Borders“)? All the facts aren’t in yet, but early signs would seem to indicate that they do. An eCommerce economy whose international shipments outnumber domestic 3-to-1 says they’re doing something right. In the UK alone, there are over a quarter-million people employed in internet-related companies, with most of those being small and medium sized businesses.
The latest figures from the ONS (Office of National Statistics) indicate that the UK economy grew 1.2% in Q2 and 0.8% in Q3. That’s an annualized growth rate of 3.2% since January of this year. Couple those strong economic growth indicators with the fact that Q4 is a seasonally strong performer for the eCommerce world, and the future looks promising for UK eCommerce business of all sizes.