U.S. e-tailers plan British invasion

U.S.-based online retailers aim to increase their one-third market share Over There. It should be easy: U.K. firms have generally been slow to catch on to e-commerce.

U.S. Internet retailers are poised to increase their one-third share of the U.K.'s $380 million online sales market by offering better service and value, according to Fletcher Research.

U.S. companies such as Amazon.comDell ComputerCharles Schwab and Microsoft are using their experience in the more developed U.S. Internet market to capture more U.K. customers, especially in the fast-growing areas of computer, book and, music sales.

U.S. companies are vying for a bigger slice of the British market, forecast to rise to $5 billion in 2003, or 2 percent of retail sales excluding financial services, from 0.2 percent last year. As well as offering lower prices, U.S. companies are attracting customers by spending more money on marketing sites that are better designed than their U.K. counterparts.

"British companies need to provide incentives for shopping online because in the long term the costs of doing business online will be lower,'' said Benjamin Ensor, an analyst at Fletcher Research. "Even an electronics retail firm like Dixon's does not offer cheap prices or other incentives to buy online.''

He said half of the U.K.'s retailers, including established names such as Marks & Spencer had no online offering. In contrast, companies such as New York-based Barnes & Noble and Fort Worth, Dallas-based Sabre Group Holdings Travelocity are increasing their investments in online merchandising in Britain.

According to U.K. retail research company, Verdict Research Ltd., only 47 of the country's 100 largest retailers have Web sites. Furthermore, only 14 of these sites allowed transactions.

Travelocity, which has been doing business in Britain for 18 months, established a U.K. site three months ago. It is now the No. 1 U.K. travel site with a 40 percent share of U.K.'s online travel market.

"We provide flexibility for customers to shop and choose from different airlines,'' said Peter Heath, a spokesman for Travelocity. "It's not just for flight bookings but also to book hotels, car hire, entertainment shows, etc.''

Fletcher's Ensor said consumers were increasingly going to sites run by U.S. companies that made it easy to buy online. "You can buy within one or two mouse clicks at Amazon's site while many U.K. sites require up to seven clicks,'' he said.

According to a survey in November by Yahoo the most popular Internet search directory, the U.K. has 8 million Internet users, compared with 7.3 million in Germany and 4.2 million in France. About 1.6 million people in the U.K. have shopped on the Internet in the six months to November, spending on average 1,356 pounds, compared with more than the 1.4 million who made purchases in Germany.

A report by Fletcher titled "Window Shopping'' indicated 61 percent of U.K. Internet users had received higher education and 77 percent were professionals. The average age was 34 years and 67 percent were men.

Copyright 1999, Bloomberg L.P. All Rights Reserved.

Featured Video