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The impact of e-commerce on the UK economy

This short story examines how e-commerce has affected business sales in the UK, focusing on e-commerce sales, the technologies businesses use to sell their products and the types of businesses that are most engaged in online sales. Estimates relating to businesses come from our E-commerce and ICT publications (which are based on UK businesses with 10 or more employees), while estimates relating to adults come from our Internet Access Households and Individuals publication. Estimates of the values of e-commerce sales are presented at current prices. Therefore, the effects of inflation have not been removed so comparison of values over time should be made with caution.

How has e-commerce contributed to the UK economy since 2008?

E-commerce refers to the trading of goods or services over computer networks such as the internet. With the emergence of new technologies, e-commerce has become a large part of some businesses’ structure, complementing traditional commercial buying and selling activities.

In 2013, the estimated value of total e-commerce sales in the UK was £557 billion (in current prices), which represented nearly 20% of business turnover. The value of e-commerce sales (in 2013) has increased by 66% since 2008, when it accounted for 14% of business turnover.

Total e-commerce sales comprise of sales received via a website and sales received over Electronic Data Interchange (EDI). Website sales, which account for 35% of total e-commerce sales (in 2013), include transactions between businesses and private customers, other businesses or public authorities. EDI sales, which account for the remaining 65% of e-commerce sales, are the computer-to-computer exchange of data and documents in a standard electronic format. EDI is commonly used for e-commerce purposes, such as sending orders to warehouses, tracking shipments and creating invoices.

The value of website sales has grown over recent years, from £111 billion in 2009 to £193 billion in 2013. As shown in Figure 1, the proportion of business turnover1 accounted for by website sales has risen steadily since 2010 and accounted for nearly 7% of business turnover in 2013.

Although the value of sales made over EDI accounted for nearly two-thirds of the total value of e-commerce sales in 2013, relatively few businesses (only 6%) used this sales method. The value of sales made through EDI has experienced a less steady rise since 2009 compared to the value of website sales. Despite having declined in 2012, EDI sales have risen over the period by almost £100 billion to £364 billion in 2013, accounting for 13% of total turnover.

Figure 1: UK website and EDI sales: Total values and as a proportion of business turnover, 2009 to 2013

Figure 1: UK website and EDI sales: Total values and as a proportion of business turnover, 2009 to 2013
Source: Office for National Statistics

Notes:

  1. Business turnover is defined as the total turnover from the Annual Business Survey which covers the UK non-financial business economy.

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Improvements in the reliability and coverage of 3G and 4G networks, along with more businesses offering wireless hotspots (for example in shops, restaurants and coffee shops), have also helped the e-commerce market in the UK to grow. Consumers now have far greater access to the internet while "on the go" that is accessing the internet away from work or home.

Use of mobile phones, smartphones, and portable computers (for example laptops, tablets, etc.) has also increased. In 2015, 7 out of 10 adults (aged 16 years and over) in Great Britain purchased goods or services over the internet (within the last 3 months). Of these consumers who purchased online, over 80% (or 57% of the Great Britain adult population) also used their mobile phone or smartphone to access the internet while "on the go". Two-fifths (39%) of Great Britain’s adult population purchased on the internet and also used a portable computer to access the internet ‘on the go’ in 2015 (see Figure 2).

Despite these developments, Figure 2 shows that 30% of adults did not purchase over the internet, within the last 3 months.

Figure 2: Internet purchasing and access to the internet using a mobile phone or portable computer (for example laptop, tablet, etc.), Great Britain 2015

Figure 2: Internet purchasing and access to the internet using a mobile phone or portable computer (for example laptop, tablet, etc.), Great Britain 2015
Source: Office for National Statistics

Notes:

  1. Base: Adults (aged 16 and over) in Great Britain
  2. 'On the go' refers to accessing the internet away from home or work.

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The wholesale industries account for the largest value of website sales relative to other industries in the UK, with website sales reaching £60 billion in 2013, up from £39 billion in 2009. However, the manufacturing industries have experienced the strongest proportional growth over the period, with turnover from website sales growing nearly threefold since 2009 to £15 billion.

Between 2012 and 2013, construction was the only industry to have experienced a fall in the value of website sales, down 12.5%. This occurred despite total turnover in the construction industry growing 6.2% over the period (Source: Annual Business Survey) (Figure 3).

Figure 3: Value of UK website sales, by industry sector, 2009 to 2013

Figure 3: Value of UK website sales, by industry sector, 2009 to 2013
Source: Office for National Statistics

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The proportion of businesses making website sales has increased by 31% between 2009 and 2013. The largest increases were in the retail, wholesale and manufacturing industries, which experienced growth in excess of 40% in businesses selling via websites over the same period.

How does the business size impact the value of website sales?

Very large companies, defined as having 1,000 or more employees, have the largest website sales – both in value and as a percentage of turnover. These types of businesses predominantly sell to private customers (£72 billion, in 2013), rather than sales to businesses or public authorities (£28 billion, in 2013). However large companies, defined as between 250 and 999 employees, are more likely to sell to businesses and public authorities than private customers.  Whereas, small and medium-sized enterprises (SMEs) are just as likely to sell to businesses and public authorities as private customers, over websites.

Figure 4: Value of UK website sales by customer type and size of business, 2013

Figure 4: Value of UK website sales by customer type and size of business, 2013
Source: Office for National Statistics

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Website sales contribute more for larger businesses. Businesses with between 10 and 49 and 50 and 249 employees gain a lower proportion of turnover from website sales, just under 4% for both. Whereas, larger companies (i.e. those with over 250, but less than 1,000 employees) gain just over 6% of their total turnover from website sales and the largest companies (that is those with over 1,000 employees) gain just over 10% of their turnover from website sales.

Background Notes

An e-commerce transaction is defined2 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”.

Estimates of the levels of e-commerce are calculated using estimates of business turnover from the Annual Business Survey (ABS) for the sectors covered by the E-commerce Survey of UK Businesses. The 2013 E-commerce Survey of UK Businesses selected approximately 7,850 UK businesses with 10 or more employees, in the manufacturing, production, construction, distribution and parts of the service sectors of the economy. It should be noted that no estimation is made in this release for businesses with fewer than 10 employees. The current comparable series begins in 2008.

The source of the information is the 2015 Internet Access Households and Individuals publication which covers adults (aged 16 years and over) in Great Britain. This coverage is different from the E-commerce Survey of UK Businesses which also includes estimates for Northern Ireland. Estimates for 2015 Internet Access in this release refer to data collected in the January, February and April 2015, as part of the Opinions and Lifestyle Survey (OPN).

E-commerce event on the changing shape of business

On 8 October 2015, we will be holding an event called “How e-commerce is changing the shape of business”. This will be held at the BIS Conference Centre, London. The event will feature a range of talks from users, producers and suppliers of e-commerce business statistics, from government, international organisations and business. For more information about the event, or to register your attendance, please email BusinessStatisticsUserConference@bis.gov.uk.

To coincide with this short story, we will also be publishing a further short story entitled ‘E-commerce in the UK and the European Union’.

Notes

  1. Business turnover is defined as the total turnover from the Annual Business Survey which covers the UK non-financial business economy.

  2. As defined by the Organisation for Economic Co-operation and Development (OECD).

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Content from the Office for National Statistics.
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