Sunny Man’s Blog

January 21st 2007

(0) Online Shopping

Internet, Life

Christmas 2006 saw the biggest amount of money ever spent on shopping over the internet than ever before here in the UK. Approximately £7.7bn was spent up to and over the Christmas period last year - an increase of over 50% from 2005. This increase in online activity was covered by most news programmes as well and sparked my interest earlier in the year. Why has online spending increased so much in just a year and what advantages does going online have over going down to your local high street stores?

Internet Adoption

As I said in a previous article, adoption of broadband internet access here in the UK has been increasing rapidly over the last couple years. BT has over 10 million broadband subscribers alone. Soon, broadband adoption here in the UK will surpass that in the US - we’ve gone online crazy. Why have we welcomed broadband access with open arms?

Broadband internet access has become a lot cheaper and a lot faster. Consumers are now being treated to speeds as fast as 24mbps in the home starting from just £14 a month. Speeds like this and costs like this mean more people can afford to get them and so more people now have access to online shops. Prices have come down because 2006 was a year of competition between companies. The year brought news of mergers such as that between NTL and Telewest and also news of new players in the market such as Sky and the Carphone Warehouse. All this activity and competition has lead to reduced prices and more choice for consumers.

Consumer Trust

Last year was also a year where security was a major issue. 2006 was a turning point where banks no longer accepted signatures when processing card transactions and ‘Chip & Pin’ became the standard verification method. This, I believe, also lead to an increase in the security that online shops provided when buying goods. Anyone who’s ever shopped online before knows that the padlock icon is something we trust and look out for. We’re becoming more liberal with our card details online. Another factor has been the increased usage of online banking - I use it myself - and the usage of sites such as PayPal to manage money.

Online Advantages

Besides the increased ability to access the online shops now, there are some major advantages to shopping online. Firstly there’s the fact that normally, goods cost less online. Secondly, you’re restricted to what shops you have near you if you shop in person. Online you have the pick of all the shops you could want which means you can get the best deal and not just settle for what you’ve got.

Usually, goods to cost less online. For example if you went into a PC World store (hypothetically) you’d pad a lot more for some products than if you shopped on their website. This is because they offer ‘web-only’ exclusive prices. Another example is video games. Take the collector’s edition of Lost Planet for the Xbox 360. Down your local shops it would probably cost you between £45 and £50 but online the price could be as low as £37.50 if you search in the right place. Also, loads of places now such as Play will deliver your item for free.

All these incentives add together to provide a cheap method of getting the item you want and quickly.

Final Thoughts

I’d say I do 3/4 of my shopping online. If I need something for school, food, clothes or if I want a DVD then I generally go down my local shopping centre or to one in a nearby city because the price difference isn’t worth worrying about. But items such as electronics, books and music require me to get them online. Online, these goods can be found much cheaper and my personal experience has been that returning goods to online retailers has been much more pleasant than returning them to high street stores.

£7.7bn over two and a bit months. I can’t even imagine that sort of money. The problem is that as we continue to spend more and more money over the ‘tubes’ we’re going to become less cautious and fraud is going to increase a lot. As long as we keep a mix of spending online and down the high street I think we’ll be okay.