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MP52292

MAPS E-SHOPPING: SEPTEMBER 2002

Overview

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This report covers: e-shopping, finance and gambling, mobile commerce, The E-Confidence Initiative, Internet Watch Foundation, Internet Crime Forum, bookds, cd's, clothing, brown goods, interactive and digital television market, internet market, on-line grocery market,

Companies covered include: Amazon, British Sky Broadcasting Group, sameday books.co.uk, WH Smith, Comet Group, DSG Retail, John Lewis, QVC, Boots,

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Table of Contents
Executive Summary
Back to Wholesaling & Retailing Index and Shopping Cart

TABLE OF CONTENTS

1. Introduction 11

THE FOCUS 11

DEFINITION 11

E-Shopping 11

Exclusions 11

Business-to-Business 11

Finance and Gambling 12

Mobile Commerce 12

2. Strategic Overview 13

MARKET DYNAMICS AND SEGMENTATION 13

Other Technologies 15

DISTRIBUTION 15

COMPETITIVE STRUCTURE 16

Appropriate vs Inappropriate Business Models 16

ADVERTISING 18

THE CONSUMER 18

Table 1: UK Adults Accessing the Internet at Home ( percent), March 1998-2002 18

CONSUMER SCHEMES 19

TrustUK 19

The E-Confidence Initiative 20

Internet Watch Foundation 20

Internet Crime Forum 20

UKISHELP 21

MARKET FORECASTS 21

Travel 21

Food 21

Books, CDs and Other Media 22

Clothing 22

Brown Goods 22

3. The Interactive and Digital Television Market 23

BACKGROUND 23

MARKET SIZE 23

CONSUMER TRENDS 24

MARKETING ACTIVITY 24

Travel 24

Food 25

Books, CDs and Other Media 25

Clothing 25

Brown Goods 26

ADVERTISING AND DISTRIBUTION 26

MARKET FORECASTS 26

4. The Internet Market 27

BACKGROUND 27

MARKET SIZE 27

Table 2: The UK Market for E-Shopping via the Internet by Sector (£m and percent), 2001 28

Figure 1: The UK Market for E-Shopping via the Internet by Sector (£m), 2001 28

CONSUMER TRENDS 29

MARKETING ACTIVITY 29

Travel 30

Food 30

Table 3: The UK Online Grocery Market by Company (£m and percent), 2002 31

Figure 2: The UK Online Grocery Market by Company ( percent of total), 2002 32

Books, CDs and Other Media 32

Clothing 32

Brown Goods 32

ADVERTISING AND DISTRIBUTION 33

5. An International Perspective 34

MARKET DEVELOPMENTS 34

Table 4: Use of the Internet by Country or Region (million users), 2001 34

Figure 3: Use of the Internet by Country or Region (million users), 2001 35

Key Markets 35

Korea 35

US 35

Europe 36

Eastern Europe 37

Table 5: Use of the Internet in Eastern Europe by Country (million users), 2001 37

Figure 4: Use of the Internet in Eastern Europe by Country (million users), 2001 38

CONSUMER BEHAVIOUR 38

6. PEST Analysis 39

POLITICAL FACTORS 39

Political Priorities 39

Regulatory Issues 40

European Distance Selling Directive 40

The Electronic Commerce Directive 41

Organisation for Economic Co-operation and Development (OECD) 41

Refunding Delivery Charges — Setting a Precedent 41

Tax Issues 41

ECONOMIC FACTORS 42

Dominant Companies 42

Low Cost of Internet Access 42

Consumer Confidence and Disposable Income 42

Table 6: Index of UK Personal Disposable Income (1995=100), 1995-2002 42

Figure 5: Index of Personal Disposable Income (1995=100), 1995-2002 43

Low Interest Rates and Access to Credit 43

SOCIAL FACTORS 43

Cash Rich, Time Poor 43

Shopping as a Leisure Activity 44

Socio-Economics 44

TECHNOLOGICAL FACTORS 44

Telephones and Televisions 44

Turning Off Analogue Television 44

Cookies 45

PC Ownership 45

Auctions 46

Broadband 46

Smart Cards and Other Secure Payment Methods 47

Barriers to Entry 47

7. Consumer Dynamics 48

OVERVIEW 48

Consumer Usage 48

Consumer Buying Behaviour 48

Consumer Characteristics 48

CONSUMER USAGE 49

Table 7: Summary of Consumer Usage of Shopping by Electronic Methods ( percent of respondents), 2002 49

I Regularly Use Electronic Methods Such as the Internet and Interactive TV to Do My Shopping (Table 8) 50

I Occasionally Use Electronic Methods Such as the Internet and Interactive TV to Do My Shopping (Table 9) 50

I Have Never Used Electronic Methods Such as the Internet and Interactive TV to Do My Shopping (Table 10) 50

Table 8: Regular Use of E-Shopping ( percent of respondents), 2002 51

Table 9: Occasional Use of E-Shopping ( percent of respondents), 2002 53

Table 10: Non-Use of E-Shopping ( percent of respondents), 2002 55

CONSUMER BUYING BEHAVIOUR 57

Table 11: Summary of Consumer Buying Behaviour ( percent of respondents), 2002 57

I Am More Likely to Use Electronic Shopping for Services Such as Insurance Rather Than Actual Physical Products (Table 12) 57

I Am More Likely to Use Electronic Shopping for Purchasing Food More Than Anything Else (Table 13) 58

I Am More Likely to Use Electronic Shopping for Purchasing Electrical Goods Than for Anything Else (Table 14) 58

Table 12: Use of E-Shopping for Services ( percent of respondents), 2002 59

Table 13: Use of E-Shopping for Food Purchases ( percent of respondents), 2002 61

Table 14: Use of E-Shopping for Buying Electrical Goods ( percent of respondents), 2002 63

CONSUMER CHARACTERISTICS 65

Table 15: Summary of Consumer Characteristics ( percent of respondents), 2002 65

I Am Concerned with the Security of Shopping with Credit Cards via the Internet or Interactive TV (Table 16) 66

I Prefer to Shop Around in Person for Bargains and Special Offers Rather Than Shop Electronically (Table 17) 66

I Always Prefer to See The Quality of the Goods Before Buying Them (Table 18) 66

Table 16: Attitudes Towards Security of E-Shopping ( percent of respondents), 2002 67

Table 17: Attitudes Towards Shopping Around ( percent of respondents), 2002 69

Table 18: Attitudes Towards Quality ( percent of respondents), 2002 71

The Demonstrations on TV Shopping Channels Encourage Me to Buy Products (Table 19) 73

I Enjoy The Experience Of A Day Out Shopping (Table 20) 73

Table 19: Attitudes Towards TV Demonstrations ( percent of respondents), 2002 74

Table 20: Enjoying Shopping ( percent of respondents), 2002 76

Shopping from Home via the Internet or Interactive TV is a Convenient and Time Saving Way of Doing Shopping (Table 21) 78

Electronic Shopping is Generally Cheaper Than Visiting a Store (Table 22) 78

Table 21: E-Shopping — Convenience and Time Saving ( percent of respondents), 2002 79

Table 22: E-Shopping — The Cost Factor ( percent of respondents), 2002 81

8. Company Profiles 83

introduction 83

THE TRAVEL MARKET 83

easyJet PLC 83

Corporate Strategy 83

Advertising 84

Distribution 84

Profitability 84

Table 23: Financial Results for easyJet PLC (£m and percent), Years Ending 30th September 1999-2001 84

Future Company Developments 84

Expedia.com 85

Corporate Strategy 85

Advertising 85

Future Company Developments 85

lastminute.com PLC 86

Corporate Strategy 86

Advertising 86

Distribution 86

Profitability 87

Table 24: Financial Results for lastminute.com PLC (£m), Years Ending 30th September 1999-2001 87

Future Company Developments 87

MyTravel Group PLC 87

Corporate Strategy 87

Advertising 88

Distribution 88

Profitability 88

Table 25: Financial Results for MyTravel PLC† (£m and percent), Years Ending 30th September 1999-2001 88

Future Company Developments 89

Opodo 89

Corporate Strategy 89

Advertising 89

Distribution 89

Profitability 89

Future Company Developments 89

Ryanair 89

Corporate Strategy 89

Advertising 90

Distribution 90

Profitability 90

Table 26: Financial Results for Ryanair Holdings PLC (£m and percent), Years Ending 31st March 2000-2002 90

Future Company Developments 90

Teletext Ltd 90

Corporate Strategy 90

Advertising 91

Distribution 91

Profitability 91

Table 27: Financial Results for Teletext Ltd (£m and percent), Years Ending 30th September 1999-2001 91

Future Company Developments 91

Virgin Travelstore 91

Corporate Strategy 91

Profitability 92

Table 28: Financial Results for Virgin Travel Group Ltd (£m and percent), Years Ending 30th April 1999-2001 92

Future Company Developments 92

THE FOOD MARKET 93

ASDA 93

Corporate Strategy 93

Advertising 93

Distribution 93

Profitability 93

Future Company Developments 93

J Sainsbury PLC 94

Corporate Strategy 94

Advertising 94

Distribution 94

Profitability 95

Table 29: Financial Results for J Sainsbury PLC (£m and percent), Years Ending 1st April 2000, 31st March 2001 and 30th March 2002 95

Future Company Developments 95

Tesco 96

Corporate Strategy 96

Advertising 96

Distribution 96

Profitability 97

Table 30: Financial Results for Tesco PLC (£m and percent), Years Ending 26th February 2000, 24th February 2001 and 23rd February 2002 97

Future Company Developments 97

Waitrose Ltd 98

Corporate Strategy 98

Distribution 98

Profitability 98

Table 31: Financial Results for Waitrose Ltd (£m and percent), Years Ending 29th January 2000, 27th January 2001 and 26th January 2002 98

Future Company Developments 99

CLOTHING 99

Next PLC 99

Corporate Strategy 99

Distribution 99

Profitability 99

Table 32: Financial Results for Next PLC (£m and percent), Years Ending 29th January 2000, 27th January 2001 and 26th January 2002 99

Future Company Developments 100

BOOKS, CDS AND OTHER MEDIA 100

Amazon.co.uk 100

Corporate Strategy 100

Advertising 100

Distribution 100

Profitability 100

Table 33: Financial Results for Amazon.co.uk Ltd (£m and percent), Years Ending December 1999 to 2001 101

Future Company Developments 101

British Sky Broadcasting Group Ltd 101

Corporate Strategy 101

Profitability 102

Table 34: Financial Results for BSkyB PLC (£m and percent), Years Ending 30th June 1999-2001 102

Future Company Developments 103

samedaybooks.co.uk PLC 103

Corporate Strategy 103

Profitability 103

Table 35: Financial Results for samedaybooks.co.uk PLC (£000 and percent), Years Ending September 1999-2001 103

WH Smith PLC 104

Corporate Strategy 104

Advertising 104

Distribution 105

Profitability 105

Table 36: Financial Results for WH Smith PLC (£m and percent), Years Ending August 1999-2001 105

Future Company Developments 105

BROWN GOODS 106

Comet Group PLC 106

Corporate Strategy 106

Advertising 106

Distribution 106

Profitability 106

Table 37: Financial Results for Comet Group PLC (£m and percent), Years Ending 29th January 2000, 3rd February 2001 and 2nd February 2002 106

Future Company Developments 106

DSG Retail Ltd 107

Corporate Strategy 107

Advertising 107

Distribution 107

Profitability 107

Table 38: Financial Results for DSG Retail Ltd (£m and percent), Years Ending 1st May 1999, 29th April 2000 and 28th April 2001 107

Future Company Developments 108

John Lewis PLC 108

Corporate Strategy 108

Advertising 108

Distribution 108

Profitability 108

Table 39: Financial Results for John Lewis PLC (£m and percent), Years Ending 29th January 2000, 27th January 2001 and 26th January 2002 109

Future Company Developments 109

QVC 109

Corporate Strategy 109

Advertising 109

Distribution 109

Profitability 110

Table 40: Financial Results for QVC (£m and percent), Years Ending December 1998-2000 110

Future Company Developments 110

SELECTED OTHERS 110

Boots PLC 110

eBay 110

Letsbuyit.com 111

Marks and Spencer PLC 111

Mothercare 111

9. The Future 112

BRANDS TO WIN OUT? 112

MOVING INTO PROFIT 112

Forecast 112

Table 41: The Forecast UK Market for E-Shopping via the Internet by Sector (£m and percent), 2005 113

Figure 6: The Forecast UK Market for E-Shopping via the Internet by Sector (£m), 2005 113

AGE PENETRATION 114

TECHNOLOGY DRIVEN 114

ECONOMIC DOWNTURN 114

NOT-AT-HOME DELIVERY? 115

E-MARKETPLACES 115

GLOBALISATION VERSUS PERSONALISATION 115

10. Glossary 116

11. Further Sources 117

Associations 117

Publications 117

General Sources 118

Bonnier Information Sources 119

Government Publications 120

Other Sources 121

EXECUTIVE SUMMARY

More and more people are shopping online via either the Internet or Interactive television services. Major retailers are now learning to utilise the Internet and Interactive television as an essential distribution channel. Many of the UK's largest firms are defining and enacting online strategies that are aimed towards a consumer who is becoming increasingly receptive to the idea of online shopping. Shopping from home no longer means poring over the glossy pages of a catalogue. It can be performed using the television, PC or even via a mobile telephone.

The more well-known companies become active in electronic shopping (e-shopping), the faster the security concerns of consumers are eroded. However, exclusive research for this report reveals that 24 percent of consumers are concerned with the security of using credit cards via the Internet or television.

Food, travel and clothing companies, and suppliers of brown goods, books and CDs have all made considerable inroads into the e-shopping sector. It is the familiar brands that are starting to shine through. Crucially, however, 43 percent of women have never been tempted to buy online.

Doing business with a company that the consumer knows from the High Street has numerous advantages for both the retailer and the consumer. For the consumer, familiarity with the brand being offered provides comfort and security in that they trust the company to which they are providing data, and that they expect the company to fulfil its obligations in a professional manner. Fraud concerns are significantly reduced. In addition, 'clicks-and-mortar' companies — i.e. those companies that have both a High Street and an online presence — offer a geographic location on the High Street that people can go to with queries, and where they can see products on offer or as a place to which unwanted goods can be delivered without the hassle of returning parcels.

Amazon remains almost alone amongst the dotcom companies to have really built a brand strong enough to compete with the larger retailers

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Last updated by Amanda Porteous 2003