The value of e-commerce in the UK has passed a staggering £100Bn a year, and is growing at over 50% a year according to an Office of National Statistics (ONS) national survey just released. Total sales by UK companies to other businesses, consumers and the public sector in 2005 equaled £103.3Bn, increasing 56% from £66.2Bn the previous year.
Commenting on the new data, @UK Chief Executive Lyn Duncan said “Although these numbers are really huge, what this ONS survey also shows is what scope there is for further growth. In the smaller business sector where we have particular strengths the survey shows just 5.9% of firms with 10-49 employees, for example were able to raise online invoices by the end of 2005. This is despite the fact that this is the single most important benefit to their larger customers such as the public sector, who are increasingly demanding this service from their suppliers. Things are undoubtedly beginning to take off now, but to some extent the change in the way the UK carries out its trading has hardly begun”.
Another indication in the survey of how far matters have yet to develop was the difference between the numbers of businesses buying against those selling online. It is generally believed that experience gained in online purchasing is an important training ground for any firm before establishing online selling capability. Again looking at the 10-49 employee firms, 87% of them had Internet access, 53% of these firms had bought over the Internet, but as at the end of 2005 only 13% of these firms had sold their goods or services online.
Although it is sales to consumers which generally grab the headlines, through firms such as tesco.com (whose sales grew by 29% to £554m in the first half of 2006), the ONS survey highlights that it is sales to businesses and the public sector which is the most important. Of the total £103.3Bn of 2005 online sales, £81.9Bn was to businesses and the public sector. Of the £37.1Bn increase in online sales since the previous year, 87% of the growth had come in this category.
The survey also looked in depth at how firms use the Internet to interact with public authorities. This is another area where again smaller firms are beginning to become involved, but have a long way to go. Gaining substantial business in the public sector generally begins with completion of tender proposals, which are more and more being provided online by public authorities. The largest UK firms ( of 1000+ employees) are around three times more likely to have taken part in this type of exercise, with 23.4% of businesses in this category having submitted a response in a public sector e-tendering system in 2005, compared to 8.1% of firms with 10-49 employees.
“The overall message” said Lyn Duncan “is that the movement over to online methods of trading is now underway. There are literally hundreds of thousands of small firms that need to get onboard and sell to consumers, businesses and the public sector. A trading website on the @UK network will allow them to do all three. At the same time, the need for connectivity is also a new aspect of the report. The 71% of largest firms reported as having e-invoicing systems linked to their back-office need these to be connected directly to their customers financial systems, which is again a major benefit of belonging to the @UK network”.
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For the full Office of National Statistics “2005 e-commerce survey” click here