E-commerce and ICT activity, UK: 2012

• 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%

• Sales by Electronic Data Interchange (EDI) made up two-thirds (67%) of total e-commerce sales in 2012, with the remainder (33%) from website sales

• Website sales (£164 billion) represented 6% of business turnover in 2012, up from 5% (£133 billion) in 2011

• 95% of businesses had broadband Internet and 82% had a website

• In 2012, 43% of businesses used social networks with almost a quarter (23%) using social media to respond to customer opinions, reviews or questions

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.

Estimates of the levels of e-commerce are calculated using estimates of business turnover for the sectors covered by the E-commerce Survey of UK Businesses from the Annual Business Survey (ABS). The 2012 E-commerce Survey of UK Businesses selected approximately 7,700 UK businesses with 10 or more employees, in the manufacturing, production, construction, distribution and parts of the service sectors of the economy.

The E-commerce Survey of UK Businesses is conducted annually to enable the UK to meet the requirements of EU Regulation 106/2009. The survey is run in all EU member states, enabling comparisons to be made between them. The questions covered by the survey are updated each year, to reflect changes and developments in the use of ICT and e-commerce across Europe.

There were changes to the measurement of e-commerce as part of the 2008 survey, which means that e-commerce estimates prior to 2008 are not comparable with those since 2008 (see background note 3). Therefore, the time series for e-commerce estimates in this release start at 2008. The available time series for ICT adoption and use varies according to the survey coverage each year.

This release uses the Organisation for Economic Co-operation and Development (OECD) definition of e-commerce. An e-commerce transaction is defined as “the sale or purchase of goods or services, conducted over computer networks by methods specifically designed for the purpose of receiving or placing of orders”. It is important to note, under this definition, that “the goods or services are ordered by those methods, but the payment and the ultimate delivery of the goods or services do not have to be conducted online”.

A quality improvement to the estimates of the values of e-commerce sales was made for the 2011 release that was published in November 2012. This was explained in an information note (69.7 Kb Pdf) published on the Office for National Statistics (ONS) website. This quality improvement has been maintained as part of this release.

Estimates of the values of e-commerce sales are presented at current prices in this release.

This release makes comparisons between four categorisations of businesses based on their size in terms of their number of employees. The employment size bands used are 10 to 49, 50 to 249, 250 to 999 and 1000 or more. This release shows that the largest businesses (1000 or more employees) dominate e-commerce sales.

This release highlights that in 2012 there was still a large difference, as in previous years, in the proportion of large and small businesses that adopt emerging technologies. For example, social networking is used by twice the proportion of large businesses compared with the smallest.

We are constantly aiming to improve this release and its associated commentary. We would welcome any feedback you might have and would be particularly interested in knowing how you make use of these data to inform your work. Please contact us via email: ecommerce@ons.gov.uk or telephone David Matthews on +44 (0)1633 456756.

Total e-commerce sales comprise 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.

In 2012, the estimated value of e-commerce sales was £492 billion. Although there has been growth in the value of total e-commerce sales, this growth has not kept pace with the growth in total UK business turnover. In 2012 e-commerce sales made up 18% of business turnover, compared with 19% in 2011.

The UK’s largest businesses (1000 or more employees) continued to dominate e-commerce sales. While there are comparatively few businesses with over 1000 employees in the UK, these businesses made up over half (51%) of all e-commerce sales.

In 2008, total e-commerce sales were valued at £335 billion. In 2012 this had reached £492 billion, an increase of £157 billion. The average annual growth in e-commerce sales since 2008 was 10% over the period 2008 to 2012, with total growth since 2008 of 47%.

The Wholesale and Manufacturing sectors reported the highest levels of e-commerce sales in 2012, of £172 billion and £157 billion respectively.

The Accommodation and food services sector reported comparatively low e-commerce sales (£9.1 billion). However, this sector, which includes hotels, campsites and restaurants, reported the highest proportional increase in total e-commerce sales in 2012, an annual increase of 57%, from £5.8 billion in 2011.

A comparable survey is run in all countries of the European Union (EU) and also in some non-EU countries. Eurostat plays a key role in this and each year leads a process whereby the data requirements for the survey are reviewed and updated. Comparative data for EU countries can be found on the Eurostat website.

Results published by Eurostat in relation to the 2011 survey showed the UK to be near the top of the EU table for the proportion of total sales that were derived from e-commerce.

In 2011, the UK reported 19% of total business turnover derived from e-commerce. This placed the UK in joint fifth position, in terms of the proportion of total turnover derived from e-commerce, when compared with other European countries. The Czech Republic reported the highest proportion (24%), and Bulgaria the lowest (3%).

Sales over a website have seen steady growth in recent years, both in terms of the proportion of businesses using websites for sales, and the value of website sales. In 2008, 13% of businesses sold over a website, to a value of £92 billion. In 2012, 18% of businesses sold over a website, with sales of £164 billion. There was a year on year increase of £31 billion (23%) in website sales since 2011.

The value of website sales, as a proportion of total business turnover, increased in 2012 to 6%, up from 5% in 2011. Of this 6%, approximately half were made by the largest businesses (1000 or more employees), at 3%. The smallest businesses (10 to 49 employees) contributed only 0.7% of the 6% estimate of total business turnover derived from website sales.

The Wholesale sector reported the highest value of website sales in 2012 (£50 billion). This sector also saw the largest annual increase in sales (£10 billion) compared to 2011. Unsurprisingly, the Retail sector reported the highest proportion of businesses making website sales (34%), with the Construction sector the lowest (7%).

As specified earlier, EDI is the computer-to-computer exchange of documents in a standard electronic format. Sales over EDI are between businesses, whereas website sales are to businesses and households. The value of EDI sales decreased in 2012 by £23 billion (7%), from £351 billion in 2011, to £328 billion. EDI sales represented 12% of total business turnover in the UK.

The decrease in the value of EDI sales between 2011 and 2012 needs to be treated with caution and could be explained as a consequence of sampling variability. The concept of sampling variability is explained in more detail in the background notes of this release.

In 2012, relatively few businesses (6%) made sales over EDI. This was a slight fall from 8% in 2011. While three times as many businesses used websites compared to EDI, the value of EDI sales was double that of website sales, at £328 billion and £164 billion respectively.

The Manufacturing sector reported the largest EDI sales in 2012 (£145 billion). This was followed by the Wholesale sector (£122 billion). However, the Wholesale sector also saw the largest reduction in the value of EDI sales in 2012, down £20 billion (14%) from £142 billion in 2011.

In 2012, 18% of businesses received orders over a website. Virtually all (99%) of these businesses received orders over websites from customers in the UK. Online (website) ordering enabled 8% of businesses to receive website orders from customers in other EU countries and 7% from customers from the rest of the world.

Relatively few businesses used EDI to make sales to customers outside the UK; 2% to other EU countries and 1% to the rest of the world.

In 2012, the vast majority of businesses had Internet access (96%). Of particular note, businesses in all of the larger size bands (above 50 employees) reported levels of Internet access above 98%.

The Internet Access Households and Individuals 2013 statistical bulletin reported in August 2013 that household Internet connections via Digital Subscriber Line (DSL) had decreased, in contrast to cable broadband which saw a corresponding increase. This pattern has not been reported by businesses, with the vast majority (86%) continuing to use DSL broadband. Only 32% of businesses reported making use of ‘other fixed Internet’ broadband (including cable). In total, 95% of UK businesses used broadband Internet in 2012.

As high speed fibre optic broadband is rolled out across the UK by providers offering improved speeds for businesses and households, it is unsurprising that more businesses indicated in 2012 that they had faster contracted Internet speeds than in 2011.

Only 8% of businesses reported speeds less than two Mega bits per second (Mbps). The number of businesses subscribing to broadband with a connection speed between 30Mbps and 100Mbps, increased from 7% in 2011 to 10% in 2012. Superfast broadband, above 100Mbps, was used by 6% of businesses in 2012.

The size of a business has a large effect on the likely Internet connection speed a business will experience. The most common connection speed for the smallest businesses was between 2Mbps and 10Mbps (43%). In contrast, the largest (1000 or more employees) businesses were most likely to use superfast broadband, with 38% connecting at speeds above 100Mbps.

In 2012, 82% of businesses had a website. 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.

In order to understand the growth in website sales in recent years it is important to expose the way in which businesses are choosing to use their websites to generate sales. In terms of use, just over a quarter of businesses (27%) used a website to publish catalogues or price lists, while approximately 1 in 5 (21%) had an online ordering or reservation system. The largest businesses (26%) were more likely to host a website that offered personalised content for repeat visitors. Only 6% of the smallest businesses offered this option.

With concerns about the security of the Internet and website sales, it is interesting to note that only 38% of businesses hosted a website that had a privacy policy statement, a privacy seal or certification related to website safety.

Social media can be defined as websites and applications that enable users to create and share content or participate in social networking. In 2012, just under half (44%) of all businesses reported that they made use of social media.

Social networks

Social networking has enabled businesses to change the way they interact with customers and provide a new facility for marketing their business and recruiting staff. In 2012, 43% of businesses used social networks such as Facebook or Linkedin. The likelihood of a business interacting on social networks is linked to their size; 79% of the largest businesses (1000 or more employees) used these networks compared with 40% of the smallest (10 to 49 employees) businesses.

Blogs and microblogs

A quarter of businesses (24%) used a blog or a microblog, for example Twitter, in 2012. The largest businesses reported use approximately three times higher than those with 10 to 49 employees, at 62% and 22% respectively. The Information and communication sector reported the highest rate of use (53%), the Transport and storage sector the lowest (5%).

Multimedia content sharing websites

In 2012, 15% of businesses used multimedia content sharing websites such as YouTube or Flickr. Half of the largest businesses used content sharing websites (50%).

Reasons for using social media

The most popular reason for using social media in 2012 was to develop the business’ image or to market products (33%). Social media has also opened up new opportunities for businesses to engage with customers; 23% of businesses responded to customer opinions, reviews or questions on social media, while 12% used it to involve customers in the development or innovation of goods or services.

Almost half (44%) of the largest businesses (1000 or more employees) used social media to recruit employees in 2012.

Business use of social media demonstrates that there are sizeable differences between large and small businesses, in the take up of new ways of using the Internet. In contrast, interaction with public authorities is an example of an established way of using the Internet for business purposes, where the difference in take up between the largest (1000 or more employees) and smallest (10 to 49 employees) businesses is far less.

In 2012, 68% of businesses provided details of their National Insurance contributions online. The highest reported figure was among those businesses with more than 1000 employees (89%), while nearly two thirds (66%) of businesses with 10 or more employees also did so.

Nine in 10 businesses (89%) completed their VAT returns entirely over the Internet. There was little difference in the rate of use of the Internet for this purpose in the three largest groups of businesses, with all groups reporting rates of use of 93% or more. The smallest businesses (10 to 49 employees) also reported high use of this facility (88%).

This release focuses on the most significant aspects of e-commerce and ICT activity. There are additional data tables on other aspects of ICT use by businesses in the tables (557 Kb Excel sheet) associated with this release.