UK Consumers Likely to Spend �20 Billion Online by 2005

A new report says that online spending by consumers in the UK is on the rise,
and likely will reach £20 billion by 2005, up from £1.7 billion this year.

An increasing range of interactive devices such as interactive digital TV and
mobile phones is expected to drive the growth in the online retail market
over the next five years, according to Fletcher Research, soon to be the UK
Research Center of Forrester Research.

The report, entitled UK Online Retail: From Minority to Mainstream, predicts
that 7.5 percent of the UK’s retail sales will move online by 2005 up sharply
from the 0.25 percent of all retail sales in 1999.

“Currently, half of all British Internet shoppers have bought books, and
while Amazon has comfortably the largest share of the market, it faces an
increasing challenge from traditional retailers such as WH Smith and new
entrants including Bertelsmann’s BOL,” said Shobhit Kakkar, an analyst at
Fletcher Research.

“However, leisure travel and computer products are the two largest sectors.
The online leisure travel market will be worth £490 million in 2000 and
computer product sales will reach £410 million. Competition is intensifying
in both sectors with new players such as Expedia and facing
established companies like Thomas Cook and Dell.”

TV and wireless devices are emerging as new access points and will drive
online retail spending., the report says. Already, interactive TV players
such as Open have reported strong sales and interactive services for mobile
devices are being rolled out.

Also, retailers will increasingly concentrate on fulfillment, dynamic pricing
and channel integration. Retailers will shift emphasis from transparency and
ease-of-use of their online offerings, and consumers will expect integrated,
customized services, the report says.

Kakkar said that on the downside, “weak, unclear buying processes remain a
barrier to online shopping adoption. Best-practice offerings show users how
far through the buying process they are but only 17 percent of sites offer
this feature.”

Effective May 10, Fletcher Research will be named the UK Research Center of
Forrester Research, following its acquisition.

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