The uptake of broadband access to the Internet in UK households has become so widespread that UK SMEs need to ensure their online presence is much more than a desultory directory listing, or a rarely updated token web page.
For the first time, last year more than half of all UK households had broadband access*, making 2007 a tipping point for Internet usage. In this article, we will look at how important it is to create a strong web presence, and the potential opportunity for extra sales that establishing an eCommerce operation can bring.
Internet usage
The UK government's National Statistics Omnibus Survey for 2007 found that Britons are online more often and for longer periods of time than ever before; UK householders are increasingly using the Internet to find out about goods and services; British consumers are purchasing more goods and services over the Internet every year.
The 2007 survey found that 61% of UK households – that's 15.23 million of them – had some kind of Internet access. Last year, 84% of households that connected to the Internet had broadband access, meaning that 51% of UK households had broadband access, significantly up from the 40% in 2006.
Broadband access encourages people to use the Internet more; 67% of UK residents (16 years and older) said they had used the Internet ‘in the last three months' and people who use the Internet, do so a lot; the survey found that 67% of Internet users went online every day.
Buying online
Even more significantly for SMEs in the B2C sector, the most popular activity of recent Internet users during 2007 was ‘searching for goods or services.' According to the survey, 53% of UK adults said they had bought goods or services online at some point in their life, and of these, 78% said they had bought online in the last three months. These purchases were not for trivial amounts, either; 21% of recent Internet users, who made online purchases, said that they had spent more than £500.
So popular has online shopping become, that it accounted for 15p of every £1 spent by UK consumers last year, according to research by the Interactive Media in Retail Group. That's a 50% rise compared to 2006's figures.
Online presence
With figures like these, it's no surprise that UK companies are making the Internet a major priority; last year YouGov research***, commissioned by the British Chambers of Commerce and Microsoft, revealed that 82% of small businesses it surveyed had some kind of a web presence.
Not having a web site is becoming as unusual for businesses as not having a landline telephone number or postal address were in the past. Increasingly, potential customers judge a prospective supplier by the calibre of their website, and not having a web presence means losing out on valuable business as UK consumers increasingly use online search to look for suppliers, rather than traditional methods such as Yellow Pages or classified adverts in newspapers.
In the first six months of 2007 more than £1.3 billion – nearly 15% of all spending on advertising in the UK – was spent on Internet advertising, according to PriceWaterhouseCoopers****. This was a 41.3% increase compared to the first half of 2006.
Google factor
To get some idea of how central Internet advertising is becoming to the entire UK economy, Google's recently announced financial results***** make interesting reading; the search giant had UK sales (mostly from selling online adverts) of $803 million during the first three months of this year. At current exchange rates that equates to just over £400 million or around £1.6 billion per year, even making the conservative assumption that Google's revenues will not continue their 40% year-on-year growth. Last year, ITV, for decades the biggest seller of advertising in the UK, had UK sales of just £1.5 billion.
It's another sign that having a strong online presence, which will likely require online advertising to drive traffic to your website, should be a top priority for SMEs this year.
The good news is that the Internet's inherent scalability means that companies can allocate relatively few resources to their web presence, with the option to scale it up in the future as their business grows.
The web can not only provide a cost-effective way to market and promote businesses, investments in eCommerce can ultimately more than pay for themselves in terms of increased sales, and lower operating costs. During 2007, online sales reached £46.6 billion in the UK according to research by Capgemini**, and sales for the Christmas quarter alone were £15.2 billion, a 50% increase compared to the same quarter in 2006.
In the next article in this series, we will look more closely at the challenges and opportunities arising from implementing an eCommerce strategy.
* http://www.statistics.gov.uk
** http://www.imrg.org/
*** http://www.britishchambers.org.uk
**** http://www.imediaconnection.com/content/17021.asp
***** http://www.google.com/intl/en/press/pressrel/revenues_q108.html