Growth markets

According to the Office of National Statistics, online sales have grown for 35 consecutive months' year-on-year in the UK, with shoppers browsing for anything from groceries, to DIY products and clothing, all from their laptop, desktop or smartphone.

In detail, the B2C e-commerce turnover grew to 13,739 million GBP, pushed along by a growth rate of 13.65%. This is set to rise in 2019, with a forecasted turnover of 15,698 million GBP and a growth rate of 14.26%. While reports by Twenga Solutions estimate 92% of the UK population are Internet users.

When looking at the biggest players in the e-commerce market, Amazon is by far the biggest. A staggering 91% of consumers stated that they use the marketplace in comparison to just 56% globally. 

Top 5 E-commerce websites

Top 1 Amazon UK

Amazon that founded in the US in 1994 started as an online bookstore and later diversified products including media, electronics, apparel, furniture, food, toys, and jewelry. It has expanded to many countries, including the UK, and has become the uncontested global leader of e-commerce and developed further into brick-and-mortar retail with the acquisition of Whole Foods Market, as well as publishing, electronics, cloud computing, video streaming, and production.

Website: amazon.co.uk – Estimated monthly traffic: 446.5 Million visits

Top 2 eBay UK

EBay which is a pioneer of e-commerce founded in 1995 is an American online marketplace that allows people and sellers to sell directly through its online auction platform. E-Bay has expanded to more than 20 countries including the UK and organizes the sale of products ranging from cars and vehicles to electronics and fashion, home and garden to sports and toys, and even business and industrial products.

Website: ebay.co.uk – Estimated monthly traffic: 355.5 Million visits

Top 3 Asos

Asos is a specialized online men and women fashion and cosmetics retailer. Launched in 2000, Asos has expanded throughout the years to multiple countries of Europe and Asia. As the leading British company in the UK e-commerce market, Asos now employs more than 3000 employees.

Website: asos.com – Estimated monthly traffic: 54.3 Million visits

Top 4 Argos

Argos is a catalog retailer that operates more than 800 shops in the United Kingdom and Ireland. As a subsidiary of the British retailer Sainsbury’s, Argos sells electronics, home and garden products, clothing, toys and sports equipment, and so on. Besides its traditional operations, Argos has also become a leader in e-commerce in the UK.

Website: argos.co.uk – Estimated monthly traffic: 51.2 Million visits

Top 5  Asda

Asda is a leading retailer in the UK, owned by the American retail giant Walmart, who is one of the top e-commerce platforms in the United States. Besides its supermarket where it sells groceries and various consumer, clothing and home products, Asda is also a financial service and mobile phone provider, which are also on offer online through Asda’s e-commerce platform.

Website: asda.com – Estimated monthly traffic: 25.6 Million visits

When you look at the top 5 e-commerce websites, it makes for familiar reading – they're all big household names, with several traditional bricks and mortar retailers who have recognized the potential of e-commerce and transferred their high street popularity over to the virtual marketplace.

The growth of online shopping certainly doesn’t mean that bricks and mortar shops are obsolete; rather that they are not necessarily required to be a successful retailer and that there is a growing expectation from the average consumer for traditional retailers to also have a strong online presence.

Consumer behaviour

British consumers are avid online shoppers, but it doesn't mean they avoid shopping on the high street. In fact, 93% of online shoppers stated they also shop in-store, demonstrating the importance of omnichannel experiences within the UK market. When looking at why British consumers choose to shop online, the level of choice, ability to compare prices, and cost play a large role.

When looking at social media, Facebook is still the most popular with regular mobile users. Additionally, 22% of consumers stated they would choose Facebook over a merchant’s website, which is quite surprising.

More than half of online consumers use their mobile/tablet to search for products, and then move onto their desktop to place the order. A key contributing factor to this status in e-commerce sales is not only the huge penetration of mobile devices but the introduction of more advanced smartphones with bigger screens, making online shopping on the move, easier than ever. Mobile devices are now central to many consumers’ lives and have made big an impact on traditional retail, with the rapid rise of mobile wallets like Apple Pay and Android Pay, making them even more central to the way we shop and make payments. E-Bay has the lead when it comes to retail apps on both Android and iOS, far ahead of its competition. The majority of online shoppers choose UK online retailers (93%) with 31% choosing retailers from other EU nations.

In the UK, shopping peaks include weekday Mondays and Sunday nights, black Friday and Cyber Monday. Monday and Sunday evenings were the “couch-surfing” days when orders for tablet devices poured in. Black Friday (the fourth Friday in November), as it is known in the United States, is now better than cyber Monday and has pushed the shopping peak to November. Online black Friday is now worth 4.3 billion pounds; Cyber Monday (the first Monday in December) is the peak period for online sales from Black Friday to December.

Marketing methods

1.Email Marketing

Email marketing is known in the UK as the most effective and sophisticated method of marketing. According to IMRG, email marketing still has a growing trend and is an important tool for online communities. The development of mobile e-commerce is considered to be a major driving force for the growth of email marketing, which has also brought years of growth in visits, purchases and mobile e-commerce.

Online e-commerce revenue from email marketing accounted for 7.7 percent of total sales in 2010, according to IMRG, and grew to 12 percent by 2015, nearly doubling in four years.

2. Media

As consumers’ media habits change, Britain is spending less on print advertising. Spending on print advertising fell by 0.2 percent to £2.4bn in 2014. Publishers, of course, are not losing money. They are spending more on digital, and most national newspapers already have digital editions.

3. TV & Radio

In the past 12 months to March 2012, an average of 90% of the British turned on the radio once a week; Radio marketing grew 7.2 percent to £57.5m in 2014. Interestingly, in the communications market report published by Ofcom in August 2015, total advertising spending on radio increased by 3.2% in 2015; Spending on commercial radio also rose 17.3 percent to £243m. Spending on national radio is dominated by brands that are nationally known or have a national reach; Advertising spending by local brands fell by 6.6%, indicating that brands are more goal-oriented and focus on localization, online advertising and cost-efficiency.

4. Affiliate marketing

Alliance marketing is also one of the gradually developing marketing methods in the UK. Affiliate marketing-generated £16.5bn in sales in 2014, according to IAB UK. In terms of ROI, the effect varies from channel to channel. For example, IMRG says the ROI is about £19.96 on the PC and £20.94 on the smartphone client. IAB UK says British businesses spent £1.1 billion on affiliate marketing in 2014.

Logistics and delivery

Among the TOP100, TOP1000, TOP10,000 sellers in Amazon UK, 27%, 27% and 33% of them use Amazon logistics (FBA) service respectively. In addition to ensuring fast delivery of goods, saving labor and freight costs, it can also improve the ranking of listing and increase the probability of obtaining Buy Box, thus increasing sales. 

Amazon logistics has become Britain’s third-largest logistics company, and the number of parcels that are delivered annually is 228 million in 2018. Compared with amazon logistics, Royal Mail delivers 1.2 billion packages a year and Hermes 314 million, making it the UK’s largest and second-largest couriers respectively.

Seventy percent of British consumers said a good delivery experience would lead them to buy from the retailer again. And despite the preference for home delivery, more and more customers have chosen shopping online and pick up their goods offline in the past five years.

Shopping online in the UK is mainly concentrated in London and the south-east of England, but for retailers from the UK or abroad to successfully enter the market, they still need a logistics service that covers the whole country.

Payment methods

Debit and credit cards that account for 57 percent of all e-commerce payments dominate the UK payments industry. In terms of card organization, Visa has a huge market share (80%), while MasterCard and American Express have 18% and 2% market shares respectively.

However, the share of card payments is expected to decline in the next few years amid the onslaught of electronic wallets. In the UK, 22% of all e-commerce payments are now made through e-wallets. Apple Pay, Samsung Pay and Android Pay have recently entered the e-wallet space. As the purchasing power of millennials increases, e-wallets are expected to become more popular.

Cash on delivery is also very common in the UK, with nearly one in 10 e-commerce payments made this way.

Opportunities & Challenges

The UK has a robust internet infrastructure with a 95% internet penetration rate. This level of commitment is reflected in its number 1 ranking in the E-Government Development Index. However, when looking at the consumer expectations that come to e-commerce logistics, the speed of delivery ranks highly as an obstacle. A quarter of all consumers had a problem in this area. Furthermore, 17% of online consumers had the wrong or damaged item delivered to them. This represents areas of improvement for e-commerce retailers and a potential investment avenue for those looking to improve their consumer experience and expand their share of the market.

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