United Kingdom - eCommerce United Kingdom - eCommerce
Overview
Internet shopping is more popular in the UK than in any other major country. Consumers in the UK spent $233 billion online in 2018, up 18.2% on 2017. Consumer eCommerce now accounts for overa quarter of the total retail market in the UK.
The growth of online retailing is driving a relentless pursuit of value for money. People continue to look online for the best deals and prices and this is driving the proportion of money being spent online, which has increased for the second year in a row. The internet is now the natural place for shoppers to look for fashion, health and beauty, home and garden, consumer electronics and travel services. One key trend is to physically look at or try a product in-store and then go home to buy it at a better price online or buy it via their smartphone or tablet. Click and collect is also becoming much more popular.
With the continuing rise of social networking and mobile internet access, social media marketing is the channel in which firms are most likely to be boosting their investment in e-commerce in the next couple of years.
Current Market Trends
The strength of online sales contrasts with the gloom in bricks-and-mortar retailing, with stores such as Debenhams becoming the latest retailer that may fall into administration or bankruptcy. For online sales, the largest sector increase was seen in footwear, with a 27.8% YoY growth at the start of 2019. This was followed by beauty at19.8%, home and garden at 12.9% and clothing at 6.7%.
Domestic eCommerce (B2C)
The main rules covering sales on the Internet are The Consumer Contracts Regulations 2013 and The Consumer Contracts (Amendment) Regulations 2015. These set out the rights consumers have when making purchases over the Internet in the EU.
Website for Domestic eCommerce (B2C)
Cross-Border eCommerce
There is a special scheme for non-EU companies selling ‘downloadable software’ via the Internet to clients within the EU. This type of transaction is classified by the EU as “electronically supplied services”. Non-EU companies selling downloadable software to EU customers must be registered for VAT in at least one member state within the EU. There are different requirements for accounting for VAT depending on whether the customer is a corporation or an individual and depending on where the customer is physically located. This is a complex subject and companies should either engage an accountant to advise them or ensure that they are familiar with the regulations. For more information about the UK’s "Electronically supplied services: Special Scheme for non-EU businesses", companies should visit VAT MOSS website.
B2B eCommerce
B2B eCommerce is not as prevalent as B2C or C2C ecommerce in the UK. Many large companies have online procurement protals, but these are not open platforms. B2B eCommerce platforms are emerging, however, and these will become a facilitator of both domestic and international business. An example of such a platform is Applegate.
eCommerce Services
There are many UK companies that provide eCommerce services to create and run platforms. The sector is well-served by such firms given that the UK is a world leader in eCommerce.
eCommerce Intellectual Property Rights
The UK legal system provides a high level of intellectual property rights (IPR) protection. Enforcement mechanisms are comparable to those available in the United States. The Intellectual Property Office (IPO) is the official UK government body responsible for intellectual property rights including patents, designs, trademarks and copyright.
Popular eCommerce Sites
Internet Retailing published its 2018 Top 500 UK online retailers recently. It lists six companies in the elite category:
Amazon - eCommerce
Argos – Most categories except groceries
Boots – Beauty, Health and Pharmacy
Marks and Spencer – Groceries, Clothing, Homeware
Screwfix– Tools and Accessories
Tesco - Groceries, Homeware, Electricals and ClothingThe full Top 500 list can be found on internetretailing.net.
Online Payment
Almost all UK-based online businesses allow customers to use credit or debit cards. Visa and MasterCard are almost universally accepted, while American Express, Diners Club and JCB, less so. Many websites use Pay Pal or other similar services. UK consumers are becoming much more aware of the issue of online identity theft and will generally only conduct financial transactions on secure websites.
Mobile Commerce
Ecommerce purchases made via smartphone have overtaken those made via tablets. In 2018 online sales made via smartphone represented 50% of all ecommerce salses and was worth an estimated $23 billion in the UK. It is forecast that online purchases made via smartphone will represent around 56% of all ecommerce sales by 2021.
Digital Marketing
There are some restrictions on general advertising. In the UK, the ‘watchdog’ for advertising is the Advertising Standards Authority (ASA). The ASA is an independent body set up by the advertising industry to police the rules laid down in the industry’s advertising codes. The advertising codes are drawn up by the Committee of Advertising Practice (CAP) and are in place to protect consumers and create a level playing field for advertisers.
Key links:
Advertising Standards Authority
Committee of Advertising Practice
Comparative ads are allowed, but they must not be disparaging. Advertising to children is more closely regulated. The general rule is that special care should be taken when promotions are targeted at children (people under 16) or when children may see ads intended for adults.
It is possible to use prize giveaways, etc., as incentives. Promotions with prizes, including competitions, prize draws and instant win offers, are subject to legal restrictions. Promoters usually seek to avoid running illegal lotteries by running skill- based prize competitions or by offering free entry if the chance-based prize promotion might encourage purchase.
As a general rule, the Internet in the UK looks and feels identical to the U.S. Pop-up ads are not prohibited and, indeed, are quite common. As a result, many users turn on the anti-pop up features in their browsers.
Spam is covered by the Privacy and Electronic Communications (EC Directive) Regulations. In summary, the regulations require UK or EU-based businesses to gain prior consent before sending unsolicited advertising e-mails to individuals. This consent must be explicitly given by individuals on an opt-in basis except where there is an existing customer relationship. The regulations also require that the use of cookies or other tracking devices are clearly indicated and that people be given the opportunity to reject them.
Spam is, however, a worldwide problem and there is little that regulators can do to prevent Spam originating from outside the EU. Many email systems have increasingly effective Spam filters.
Major Buying Holidays
The main buying holidays in the UK are Easter, Black Friday, which is rapidly morphing into a three-week shopping spree, Christmas and New Year.
Social Media
Eighty three per cent of adults aged 18 or over access social media sites Popular social media services in the UK include:
|
Description |
UK Users % |
|
|
79% |
|
YouTube |
79% |
|
|
47% |
|
|
41% |
|
Google+ |
39% |
|
|
36% |
|
|
33% |
|
Snapchat |
30% |