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Retail sales on internet are doubled to £40bn

By David Derbyshire, Consumer Affairs Editor, Daily Telegraph
(Filed: 23/11/2004)

Online sales rose to a record £40 billion last year, more than double the previous year’s total, according to the Office for National Statistics.

The figures, the latest official data available, mean that internet sales have doubled every year since the start of the millennium.

However, analysts believe that the rapid growth of home shopping and online transactions may be slowing. This year, revenue created by the internet is expected to rise by 40 per cent

A second report, due out next week, is expected to show that the rise of internet shopping has not led to the demise of the high street store.

The top 10 most visited online retail sites are dominated by familiar, old fashioned names such as Tesco, Argos and Next.

The National Statistics annual e-commerce survey revealed that the value of internet sales rose from £13.5 billion in 2002 to £39.5 billion in 2003.

For every £100 worth of sales over the internet, £67 was spent on physical goods such as groceries, industrial raw materials, books and clothes, the survey found.

Another £31 was spent on services such as air tickets or hotel rooms and £2 was spent on digital products, such as music downloads, weather forecasts or pictures.

The report did not cover the financial sector.

The value of internet sales to households rose from £6.4 billion in 2002 to £11.4 billion last year. About six per cent of all retail sales are now online.

Economists believe that e-commerce has continued to grow this year by 40 per cent. James Roper, from the analysts IMRG, said retail sales this year were expected to be about £15 billion. “The UK is the largest market in Europe for online shopping,” he said.

“The main issue is that the growth has fallen back from a 100 per cent increase for four years in a row to a 40 per cent increase this year. That is down to the complete lack of investment in this area by retailers.”

The market for internet shopping is potentially huge. Around half of all homes have an internet connection, while just a sixth have broadband.

“There are 18 million people who have shopped online in the UK, and 12 million who do it at least once a month,” he said.

“But the quality of the service they are getting is poor.”

A separate survey, published by Hitwise, revealed that 17 per cent of all pages visited on the internet belonged to online shops.

The online auction phenomenon, made popular by the e-bay websites, has continued to grow, the study found.

More than a third of visits to internet retail websites were to auction sites, making it the most popular category for online shoppers.

In October, e-bay’s British and American sites were the most visited retail sites, followed by Amazon – the books and music store. Tesco, Argos and Next are also in the top 10. Tesco, the biggest online grocer, takes 120,000 online orders a week.

Websites that allow shoppers to compare prices at different stores and buy the cheapest are also increasingly popular. Kelkoo.com is the third most visited retail site.

The Hitwise survey also revealed that 53 per cent of visitors to online stores are male, and that 28 per cent are aged between 25 and 34.

A quarter come from London and the South-East and more than half are classed in the social economic grouping ABC1.

This article is from the Daily Telegraph Online, click here to visit them.