New research on the impact of e-commerce on businesses, consumers and the economy puts UK first
New research on the impact of e-commerce on businesses, consumers and the economy puts UK first
The so-called ‘internet economy’ contributed the most to the UK economy in 2010, according to a new report published by The Boston Consulting Group (BCG) late yesterday.
The report assessed the contribution of e-commerce sales to the gross domestic product (GDP) of the G-20 nations. But its contribution to UK GDP was growing at 10.9% a year, higher than the average of 8.1 per cent across the group of 20 nations. The UK even led South Korea with a 7.3% growth rate and China at 5.5%.
Leading position under threat
Predicting 11% growth for the UK, the new report, entitled The Internet Economy in the G-20: The $4.2 Trillion Growth Opportunity, also forecast it would be overtaken by an average annual growth rate of 18% across developed G-20 markets. But developing markets will grow more than twice as fast, with Argentina and India leading at 24% and 23% a year respectively.
At 4.7%, the 2010 share of US GDP contributed by the e-commerce was about the same as the share contributed by the federal government and ranked slightly ahead of the developed markets’ average share of 4.3%.
“The Internet economy offers one of the world’s few unfettered growth stories,” said Dean. “Policymakers often cite GDP growth rates of around 10 percent per year in the developing markets, but they look past similar, or even higher, rates close to home.”
Eric Abensur, chief executive at e-commerce software company Venda, commented: “It comes as no surprise to find the British internet economy is booming. As broadband penetration, pervasiveness of mobile devices and public Wi-Fi connectivity increase we’re seeing huge growth in online sales among our client base, far higher than stated by BCP.
“When it comes to George Osborne’s upcoming Budget statement, the Government would do well to acknowledge and build upon the wealth generated by the internet. Improving internet access and speed alongside helping businesses make the move to online could see the internet become a powerful catalyst for growth as well as a truly significant source of income.”
Skills and IT to harness opportunity
But he added that BCG has stated that lack of technical skill has proven a barrier for many but with software as a service (SaaS) or cloud-based providers offering all the capability without the in-house investment, online retail is now more accessible than ever before.
Abensur also highlighted the international opportunities that both UK and US retailers particularly are harnessing with e-commerce offerings. “Thanks to the similar cultural and common language many of our US-based retailers are looking towards Britain as the first port of call for international expansion. And vice versa,” he said. “Given the maturity of online shopping in the UK – as well as the highly developed logistics infrastructure and simple tax regime – US retailers who prioritise the UK are reaping fast rewards.”
A copy of the BCG report can be downloaded at BCG Perspectives.
