E-business sector trends

(last updated July 2019)

The last few years have seen:

  • a sharp increase in household and business access and use of the internet - by the late 2010s nearly 90% of UK households were equipped with a broadband connection of some sort and this is growing
  • the introduction of government initiatives to encourage small businesses to trade online and to roll out fast broadband across the whole of the UK - only a very small proportion of connections are now the much slower dial-up
  • the roll-out of fast 3G - and latterly 4G - mobile broadband and the widespread availability of (often free) wi-fi
  • technological developments which mean that people now go online using a range of different devices, with smartphone and tablet use growing rapidly. Website owners have been forced to respond by making sure their websites can be viewed properly on screens of all sizes
  • a huge increase in the volume of information available online, some of it free and some of it charged for
  • the introduction of legislation relating specifically to internet trading
  • increasing volumes - and value - of sales being made online, particularly at Christmas time. The value of online retail sales continued to grow even during the economic downturn of the late 2000s/early 2010s and now account for over 17% of total sales, with growth expected at the rate of about 15% a year
  • a substantial increase in the amount spent on online advertising since the mid 2000s
  • the prohibition of charging customers for paying by card. From January 2018 UK businesses selling to UK customers will not be able to charge in-store or online customers extra for paying by card, whether by debit or credit card (including American Express) and linked ways of paying such as PayPal or Apple Pay. The new rules apply to all businesses in the EU which will also be banned from charging these fees

The tax arrangements of companies like Google, Amazon and Microsoft have been much in the news because of the low rates of tax they pay. According to the European Commission the tax rules designed for the traditional economy don't work well for activities based on intangible assets and data, often collecting less than half the tax paid by traditional companies. It proposes a common tax scheme for e-businesses throughout the whole of the EU.

The mid 2000s saw the growth of 'Web 2.0' - interactive websites that let their users create most or all of the content. Some of these, like Wikipedia, are non-commercial. Others, like Facebook, Youtube and Twitter, aren't directly commercial but are used more and more by businesses to promote their brand name, products and services. Many websites now feature integration with popular social networking sites such as these.

New internet ventures have learnt from the mistakes of the early dot.com failures and have concentrated on cutting costs, improving efficiency and, above all, generating income within a reasonable time frame. Developments in the parcel delivery sector mean that online businesses can offer their customers a range of postage options - including same day delivery in some cases - at different price points.

Most industry commentators agree that 'm-commerce' - selling to customers using small screen handheld devices to access the internet - will be the big growth area in online retailing in the next few years and recent changes made by Google mean that mobile-friendly sites are favoured in the rankings of searches made on mobile devices. So it's very important to make sure that your website is optimised so that it renders correctly on both small and large screens. You may even consider creating an m-commerce 'app' that can be used by mobile shoppers.

Keep up to date with developments

Keep up to date with industry trends by visiting the New Media Knowledge (NMK) website. NMK is a publicly funded resource for those working in digital media.

You may find it useful to look at the government publications ICT of UK Businesses, which includes e-commerce sales figures and business internet usage data, and Retail Sales, which includes internet retail sales information. You can download both of these from the ONS website.

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