More than a matter of convenience: Behind the UK’s surge in e-commerce
2019 marks the first year the majority of the world’s population will be ‘connected’ – a figure that equates to four billion internet users, according to Euromonitor International.
Having analysed different countries’ current ‘digital standing’, as well as predicted commercial growth, the market research provider ranked the UK second in its Digital Consumer Index forecast.
Led by the US, the top ten also includes South Korea and Australia, ahead of European contenders Denmark, the Netherlands, Sweden, Belgium and Norway.
In the UK, retail continues to be the largest online industry – which is growing with the integration of ‘trending’ voice-driven commerce, according to senior research analyst at Euromonitor International, Rabia Yasmeen.
“Adoption of Amazon’s Alexa by supermarkets, Ocado and Morrisons, indicates potential development of voice-powered internet purchases.”
Mobile-based foodservice purchases are also “posed to see robust growth”, Yasmeen continued, citing developments in online ordering and delivery services by global players such as Just Eat, Deliveroo and Hungryhouse.
Connectivity driving e-commerce
While multiple factors, including voice-activation trends and takeaway food platforms, are contributing to the UK’s growing e-commerce market, the primary driver relates to Britain’s connectivity, according to Euromonitor International research analyst, Valentina Vitali.
“The first reason why e-commerce is very well developed in the UK tracks back to the high level of development of both the mobile and the home connectivity infrastructure. 3G coverage is approximately 100%, while 4G reaches more or less 95% of the areas in the country,” Vitali told FoodNavigator.
“Home connectivity is increasing as well, both in terms of coverage and broadband speed,” she continued.
‘Digital readiness’, which plays a major role in determining the extent of development of e-commerce in a country, also sets the UK apart from a number of European neighbours, we were told.
“Other European countries such as Italy, Spain and even Germany lag behind the UK in terms of infrastructure developments and this makes the spread of digital commerce more difficult.”
Money vs time
Another major reason for the surge of e-commerce in the UK is the convenience of this shopping method.
Whereas in the past, the hunt for lower prices was the key factor driving online shopping, Vitali said today’s consumers are more attracted by the possibility of saving time.
“As people become increasingly busy and the pace of their life becomes hectic, the easy and quick access to non-physical stores is the main determinant of the consumers’ shift to online purchases.
“The optimisation of retailers’ online stores for mobile phones and the development of app-based stores allows customers to shop from wherever they are and at any time of the day.”
Recipe boxes are one such way UK consumers are looking to save on time. The boxes, which contain all the necessary ingredients and the recipe to prepare nutritious meals at home, can be ordered online and home-delivered.
“Both start-ups and incumbent grocery retailers are embracing this trend, as consumers seem to be very response to these new products,” said Vitali.
Indeed, earlier this year, two UK meal kit start-ups – Gousto and Mindful Chef – announced plans to expand their businesses having secured series funding of £24m (€26.8m) and £18m (€20m) respectively.
Gousto plans to invest the capital in its machine learning and automation capabilities, which drive its recipe recommendation service. Mindful Chef said the investment will help expand its customer base in the UK and capitalise on the growing recipe box market, which is expected to double before 2030.
When sold by grocery retailers, “recipe boxes are prepared by the retailers themselves and, in addition to perfectly [addressing] consumers’ needs, they also allow the retailer to market products of their choice, which are usually part of their private label range,” Vitali explained.
Millennials in the Big Smoke
Another factor driving the e-commerce market within the UK is its finance-focused capital, London.
According to Vitali, the city appears to be “the most prominent hub” in terms of e-commerce spending in Britain, with a high concentration of multinationals.
This, in turn, implies a large presence of mid- to high-income young professionals, she continued. “The Millennials are the most tech-savvy generation. They like to be always connected and are interested in exploiting the benefits of innovations that could make their daily lives easier. This justifies the higher spending on online purchases observed in the city.”
In addition, British retailers tend to trial their innovative online shopping delivery solutions in the Big Smoke, she said, “to respond to the needs of an increasingly demanding clientele.”
