Monitoring e-commerce: 2014

This section shows the key charts which sit within each indicator and discusses the trends.

A1&A2: Volume of e-commerce sales – via EDI or via website / e-commerce sales as a percentage of total turnover

E-commerce sales are the key measure which can be used for monitoring e-commerce performance. Total e-commerce sales consist of sales received over a website and sales received over Electronic Data Interchange (EDI). EDI is the computer-to-computer exchange of documents in a standard electronic format. EDI is a central part of e-commerce because it enables businesses to exchange information electronically, much faster, more cheaply, and more accurately, than is possible using a paper-based system. Figure 1.1 shows e-commerce sales in terms of value (£) and e-commerce sales as a proportion of turnover. Figure 1.2 breaks this down into sales made over the website and via EDI. Estimates relate to businesses with 10 or more employees.

Figure 1.1: Total value of e-commerce sales (£, left hand axis, red line) and e-commerce sales as a percentage of total turnover (%, right hand axis, blue line), 2008 to 2012, UK

Source: E-Commerce Survey, Annual Business Survey (ABS) - Office for National Statistics

Notes:

1. Businesses with 10 or more employees

• E-commerce sales represented 18% of business turnover in 2012, down from 19% in 2011, but up 4.5 percentage points from the 2008 estimate of 14%.
• The value of e-commerce sales has risen from £335 billion to £492 billion between 2008 and 2012.
• Sales by EDI made up two-thirds (67%) of total e-commerce sales in 2012, with the remainder (33%) from website sales. In 2008, sales by EDI represented 73% of total e-commerce sales. However, the value of sales by EDI in 2008 (£243 billion) was lower than in 2012 (£328 billion).
• Website sales (£164 billion) represented 6% of business turnover in 2012, up from 5% (£133 billion) in 2011 and 3.8% (£92 billion) in 2008.

B3: E-commerce sales by size of business

The 2012 e-commerce bulletin shows that size of business is likely to affect whether the business has the infrastructure for e-commerce. Size can influence the Internet connection speed a business will experience (shown for all business with more than 10 employees in indicator B7). Also, whereas virtually all of the largest businesses (1000 or more employees) had a website (99%), not all of the smallest (10 to 49 employees) businesses (80%) in the UK were making use of this medium to generate sales. Figures 1.3a and 1.3b respectively show the value of e-commerce sales and the proportion of turnover generated through e-commerce for each of the different employment size bands. (Information on the proportion of businesses making e-commerce sales, by size of business, is also available in the excel download file for Figure 1.3a.)

• Larger businesses have driven the increase in e-commerce sales between 2008 and 2012, although e-commerce sales in smaller businesses have increased since 2008 (Figure 1.3a).

• The proportion of business turnover derived from e-commerce sales is higher in larger businesses (26% in the 1000+ employees group in 2012) than smaller businesses (6% in the 10-49 employees group) (Figure 1.3b).

• In the smallest employment size band (10-49 employees), the proportion of business turnover derived from e-commerce sales was estimated at 3% in 2008 and 6% in 2012.

• For businesses with 250-999 employees, proportion of turnover from e-commerce was 21% in 2012, up from 16% in 2008.

Information is not collected from businesses with fewer than 10 employees in the e-commerce survey. However, the Small Business Survey does include some related information.

• Data from the 2012 Small Business Survey shows that 32% of those businesses with 0-9 employees were selling goods and services over the Internet. 33% of those businesses with 0-249 employees (SMEs) were selling goods and services over the Internet.

B4: Businesses making sales online by industry

Analysis by industry is of interest because levels of sales can vary between the different industries captured by the e-commerce survey.

• The wholesale and manufacturing industries reported the highest levels of e-commerce sales. In 2012 wholesale sales were £172 billion (£107 billion in 2008) and manufacturing sales were £157 billion (£128 billion in 2008).

• The accommodation and food services industry reported comparatively low e-commerce sales (£9 billion). However, this industry, which includes hotels, campsites and restaurants, reported the highest proportional increase in total e-commerce sales in 2012, an annual increase of 57%, from £6 billion in 2011. In 2008, e-commerce sales in this industry were £3 billion.

B5: Businesses having purchased online by industry

• The proportion of businesses making e-commerce purchases increased between 2008 and 2012 from 34% to 60%.

• The information & communication industry had the highest proportion of businesses making e-commerce purchases, 69% in 2012.

• The accommodation and food services industry had the highest increase in proportion of businesses purchasing online between 2008 and 2012 (34 percentage points).

B6: Proportion of businesses with a website

Indicator A1 shows that sales via a website, though lower than EDI sales, are increasing. The potential for businesses to increase their e-commerce is at least partly dependent upon whether they have a website.

• 82% of businesses (with 10 or more employees) in 2012 had a website compared with 75% in 2008.

• 21% of businesses had a website with online ordering or reservation/booking functionality.

• 7% of businesses had order tracking available on-line.

(Note – proportions are expressed as a proportion of all businesses not just those with a website)

• Data from the 2012 Small Business Survey shows that 68% of micro businesses (with 1-9 employees) had their own website. 61% of those businesses with 0-249 employees (SMEs) had their own website.

B7: Speed of Internet connection (businesses)

As high speed fibre optic broadband is rolled out across the UK by providers offering improved speeds for businesses and households, the potential for e-commerce expands.

• In 2012, only 8% of businesses (with 10 or more employees) reported maximum contracted speeds fewer than two Mega bits per second (Mbps), down from 11% in 2010.

• The number of businesses subscribing to broadband with a connection speed between 30Mbps and 100Mbps, increased from 5% in 2010 to 10% in 2012.

• Superfast broadband, above 100Mbps, was used by 6% of businesses in 2012, up from 5% in 2010.

B8: Businesses with fixed broadband access (further detail by other types of access)

Broadband technologies are considered to be important when measuring access to, and use of, the Internet, as they offer users the possibility to transfer large volumes of data rapidly and keep access lines open. The take-up of broadband is considered to be a key indicator within the domain of Information and Communication Technologies (ICT) policymaking. Widespread access to the Internet via broadband is seen as essential for the development of advanced services, such as e-business, e-government, e-commerce or e-learning. Digital subscriber lines (DSL) remain the main form of delivery for broadband technology, although alternatives, such as the use of cable, satellite, fibre optics and wireless local loops are becoming more widespread.

• 95% of UK businesses (with 10 or more employees) used broadband Internet in 2012 (Figure 1.8).

• In 2012, as in previous years, the vast majority (86%) of businesses used DSL broadband with only a third reporting that they made use of ‘other fixed Internet’ broadband, including cable. (Note - businesses can report use of more than one way of accessing the Internet.)

• A decreasing proportion of businesses make use of dial-up connections or ISDN, 27% in 2008 down to 16% in 2012.

• According to the 2012 Small Business Survey, most (91%) of businesses with 0-9 employees and 92% of SMEs (with 0-249 employees) have Internet access with the majority of those having broadband

C9: Use of the Internet by individuals for ordering goods or services from UK, EU, rest of world

Use of the Internet for ordering goods or services is a key indicator for showing whether individuals are making use of e-commerce opportunities. One would anticipate an increase in this measure to be mirrored by an increase in actual sales (A1 and A2). Though e-commerce sales are increasing, a key area of interest of the Task Force chaired by Lord Young was why only about 10% of all EU consumers buy cross-border. This indicator will assist in keeping track of the UK’s performance in this area.

The Opinions and Lifestyle Survey covers households in Great Britain. The two questions relevant to this indicator are:

'When did you last buy or order goods or services for private use over the Internet (excluding manually typed e-mails, SMS, MMS)?

Within the last 3 months
Between 3 months and a year ago
More than 1 year ago
Never bought or ordered

From whom did you buy or order goods or services for private purpose over the Internet in the last 12 months? (tick all that apply)

a) UK sellers
b) Sellers from other EU countries
c) Sellers from the rest of the world
d) Country of origin of sellers is not known'

Figure 1.9 expresses the numbers of adults ticking each option in the second question as a proportion of those that tick either the first or second box in the first question, i.e. proportions are of those adults who have purchased goods or services over the Internet within the last year.

• Purchases from UK sellers far exceed purchases from other countries. Of those who had purchased goods or services, 87% of adults had purchased from UK sellers in 2008 rising to 91% in 2014.

• The proportion of adults buying from sellers from other EU countries is estimated to have increased from 12% in 2008 to 23% in 2014.

• Estimates of the proportion of adults buying from sellers from the rest of the world has stayed fairly flat over the period 2008 (18%) to 2014 (21%).

C10: Daily use of the Internet (individuals)

How often individuals are using the Internet is likely to be directly related to their ability to make use of e-commerce opportunities.

• Use of the Internet on a daily basis has more than doubled, from 35% of all adults in Great Britain in 2006 to 76% in 2014.

• 2014 estimates for Great Britain show that 13% of adults had not used the Internet in the last three months, down from 40% of adults in 2006.

• The proportion of households with Internet access has increased markedly since 1998 from 55% in 2005 to 84% in 2014 (see Figure 1.10).

Figure 1.10: Proportion of households with Internet access (red line) and proportion of adults (16+) making daily use of Internet (blue bars), 1998 to 2014, GB

Source: Opinions and Lifestyle Survey - Office for National Statistics

Notes:

1. UK estimates from 1998 to 2004. GB estimates from 2005 to 2014.

C11: Use of selected mobile devices to access the Internet (individuals)

Mobile Internet is fast growing (UK m-commerce¹, according to IMRG, represented a third of the UK online retail market) and is changing the nature of shopping, blurring the boundaries between online and offline sales. Consumers search for products online while out shopping, comparing in-store prices with online offers, and downloading coupons and vouchers at the point of sale in store. The concept of the ‘store in the pocket’ has become important for retailers, yet the use of mobile telephony when shopping cross-border is being hindered by relatively high data roaming charges when outside the consumer’s home country.

• In 2014, 68% of adults in Great Britain had accessed the Internet 'on the go' using a mobile phone and/or a portable computer. This was up from 58% of adults in 2012.

• In 2014, the most popular device used to access the Internet ‘on the go’ was a mobile phone, with over half of all adults (58%) accessing the Internet this way.

C12: Use of the Internet for participating in social networks (individuals)

Social networks are increasingly becoming another route for businesses to advertise and promote their products.

• In 2014, 54% of adults in Great Britain had used the Internet for social networking. This compares with 45% in 2011 (when estimates were first available).

• There is little difference between men and women in terms of the proportions who use the Internet for social networking. However, age is an important factor. In general, the proportion of adults recently using social networks decreases with age. In the 16 to 24 age group, 91% had used social networks in the three months prior to being interviewed compared with only 13% of those aged 65+ (Figure 1.12).

Social Networking: The UK as a Leader in Europe looks at UK estimates for 2012 in an international context.

C13: Reasons for not having Internet access (households)

The reasons people do not have Internet access are potentially relevant to understanding why people do not engage with e-commerce. It is fair to assume that there will always be a proportion of the population who do not wish, or are unable, to engage in e-commerce activities. However, for others, access to e-commerce may be prohibitive and so it is important to understand the reasons why.

Figure 1.13 shows proportions of households by each reason, expressed as a proportion of those households who do not have Internet access. From Figure 1.10 we know that the proportion who do not have access is falling. There will be a core of people, probably defined at least to some extent by age, who are never likely to engage with the Internet (contributing to the ‘don’t need Internet’ line in Figure 1.13). The usefulness of this indicator in monitoring the reasons for lack of engagement is therefore likely to reduce over time as these data reflect the views of an increasingly smaller pool of households.

In 2014, of those households with no Internet access:

• nearly a third (32%) cited lack of skills as a reason for not having Internet access,

• 12% felt equipment costs were too high with a similar proportion (11%) thinking the same about access costs,

• 6% were deterred from gaining access by privacy or security concerns.

Notes for annex 1: Analysis of the indicators - section C

1. M-commerce can be defined as the act of shopping on a portable device rather than a traditional desktop or laptop computer. The portable device is most commonly a smartphone or tablet.

Image 2.1: Detail of question on e-commerce purchases from the 2013 ONS e-commerce survey

Eurostat make use of a series of different indicators to help benchmark digital Europe from an Individual, Household and Enterprise perspective. Some of these relate directly to e-commerce, whereas others potentially impact on the ability of individuals, households and businesses (enterprises) to partake in e-commerce activities. Those that are applicable, in some way, to e-commerce are listed below, by sector:

Individual

At a high-level their Key Performance Indicators (KPIs) are:

• Individuals using the Internet for ordering goods or services;

• Individuals using the Internet for ordering goods and services from other countries;

• Individuals regularly using the Internet;

• Individuals never having used the Internet;

• For monitoring the digital economy over the period 2011-2015:

• Individuals having accessed the Internet at home;

• Individuals having accessed the Internet only at home;

• Individuals having accessed the Internet at work;

• Individuals having accessed the Internet at place of education;

• Individuals using selected mobile devices to access the Internet;

• Individuals using a mobile phone (via 3G) to access the Internet;

• Individuals using a laptop via a wireless connection to access the Internet;

• Internet use by individuals;

• Individuals frequently using the Internet;

• Individuals using the Internet for participating in social networks;

• Individuals using the Internet for reading/downloading online newspapers;

• Individuals using the Internet for listening to web radio/watching web television;

• Individuals using the Internet for Internet banking;

• Individuals using the Internet for selling goods and services;

• Individuals using the Internet to buy or order content online;

• Individuals using the Internet for playing or downloading games, images, films or music.

Household

For monitoring the digital economy over the period 2011-2015:

• Households with Internet access at home;

• Households with broadband access;

• Reasons for not having Internet access at home.

Enterprise

At a high-level the Key Performance Indicators (KPIs) are:

• Enterprises having purchased online (at least 1%);

• Enterprises having received orders online (at least 1%);

• For monitoring the digital economy over the period 2011-2015:

• Enterprises with fixed broadband access;

• Enterprises giving portable devices for a mobile connection to the Internet to their employees.

For keeping track of ICT usage by enterprises:

• Share of enterprises’ turnover on e-commerce;

• Enterprises sharing electronic information on sales or on purchases with the software used for any internal function;

• Enterprises using automated data exchange with customers or suppliers;

• Enterprises using Radio Frequency Identification (RFID) instrument;

• Enterprises whose business processes are automatically linked to those of their supplier and/or customers

• Enterprises using software solutions, like CRM to analyse information about clients for marketing purposes

For assessing the use of ePublic services by Enterprises:

• Enterprises using the Internet for interaction with public authorities;

• Enterprises using the Internet for interaction with public authorities, by interaction;

• Enterprises using the Internet for submitting a proposal in a public electronic tender system to public authorities.

With respect to computers and the Internet in enterprises:

• Enterprises having remote employed persons who connect to the enterprises’ IT systems from home.

The European Commission Digital Agenda Scoreboard assesses progress with respect to the targets set out in the Digital Agenda for Europe.

Image 4.1: Digital Agenda Scoreboard (screengrab from the Digital Agenda website)

Further information

Internet Access - Households and Individuals - Use of the Internet by adults over the age of 16 in Great Britain and how households connected to the Internet in 2014. It provides information on what adults use the Internet for and the types of purchases made online.

ICT Activity of UK Businesses - This release provides estimates of the values of e-commerce and the adoption and use of Information and Communication Technologies (ICTs) by UK businesses. The source of the information is the E-commerce Survey of UK Businesses.

National Accounts Articles - Articles to support National Accounts outputs

1. Cabinet Office (1999): e-commerce@its.best.uk

2. Cabinet Office: Government Digital Strategy

3. Department for Business, Innovation & Skills: Small Business Survey

4. Department for Culture, Media and Sport: Stimulating private sector investment to achieve a transformation in broadband in the UK by 2015

5. European Commission: e-commerce statistics

6. European Commission: Digital Agenda for Europe

7. Eurostat: Statistics database

8. OECD: Understanding the drivers of e-commerce diffusion

9. Office for National Statistics: Consultation pages (open consultations)

10. Office for National Statistics: E-commerce and ICT activity of UK businesses

11. Office for National Statistics: E-commerce dashboard

12. Office for National Statistics: E-commerce interactive graphic

13. Office for National Statistics: Internet Access quarterly update

14. Office for National Statistics: Internet Access – Households and Individuals

15. Office for National Statistics: Clayton (2002): Towards a Measurement Framework for International e-Commerce Benchmarking (462.4 Kb Pdf)

16. Office for National Statistics: Jones (2014): E-commerce: measuring, monitoring and gross domestic product

17. UN conference on trade and development: Fredriksson (2013)