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January 31, 2007

Christmas online sales soar but challenges remain

Total online sales for Christmas 2006 reached GBP30.2 billion, and the UK was the biggest online shopper in the EU. These figures demonstrate the growing importance of the online retail business to the UK economy as a whole, but two significant issues have been exposed by this rapid growth, and these represent new challenges that must be addressed to ensure this growth continues.

By CBR Staff Writer

For the 10 weeks running up to Christmas, UK consumers spent GBP7.66 billion, which represents a 54% increase from the 2005 Christmas figure of GBP4.98 billion.

Many of these online consumers experienced the hassle-free advantage to shopping via the internet. However, the logistics of ensuring that the goods are delivered on time and undamaged still represents a major challenge for the retailers.

The first challenge is to ensure that all goods, when ordered online, are clearly identified as in- or out-of-stock before the customer commits to purchase them, and also to provide a guarantee of when the goods will be delivered.

The 10 weeks before Christmas represent 25% of total annual online sales, therefore online retailers must be able to match their high street counterparts in terms of product availability if they expect to retain customers’ loyalty.

A survey in 2006, carried out by specialist consultancy company Nomensa, found that none of the UK’s 30 most important retailers’ websites met the minimum standards of Web Content Accessibility Guidelines (WCAG) for disabled users. The UK currently has 10 million registered disabled people, and, according to Interactive Media and Retail Group (IMRG), the leading industry body for global e-retailing, 40% of UK shoppers purchased online in the four weeks before Christmas, and spent an average of GBP94 per person.

Using these figures, Nomensa has calculated that, because of the accessibility issues, online retailers could have lost approximately GBP367 million in this period, which would have increased the headline figure to approximately GBP8.5 billion for the 10 weeks before Christmas.

Therefore, the second challenge is to ensure that online retailers do not limit their market through poor website design. Some simple design considerations would enable more users to be able to shop online, and these include:

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* Use of shortcuts so that a mouse is not required to navigate the site and make selections.

* Adding text descriptors to images so that the visually impaired can identify what the product is.

* Using the correct combination of colors, font, and text size to make the site readable and usable.

The online retail industry is moving from the early adopter phase to the market adoption phase in its lifecycle, and the number of large, new, online retail entrants to the market appears to have reached a period of stability.

According to figures from online measurement company Hitwise, in 2005, one in every four UK internet shoppers visited eBay UK, which demonstrates that the new entrants, and not the established high street brands, are driving the online market. However, if these websites fail to address the two challenges identified above then they are not only limiting their potential customer base, but also damaging the credibility of the online shopping experience.

Source: OpinionWire by Butler Group (www.butlergroup.com)

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