An internet suer
Users aremaking less online purchases according to ONS figures

Is the online retail boom slowing?

Figures from the government suggest fewer people are using the internet to make purchases than two years ago, writes Tom Young

Written by Tom Young

The latest official internet use statistics from the government suggest a worrying trend for online retailers ­ in many industry sectors the proportion of people in the UK purchasing goods on the web appears to be falling.

Figures from the Office of National Statistics (ONS) issued last week show that in more than half the business sectors surveyed the percentage of adults buying goods on the web stayed the same or fell (see graph) over the past two years.

“Unfortunately we don’t look into why, but the figures do suggest that purchase rates in many areas have fallen in the past two years,” said an ONS spokesman.

Areas where a smaller percentage of adults were purchasing than two years ago include: travel and holidays, food and groceries, insurance and financial services; and computer hardware.

But even bigger falls came elsewhere ­ the proportion of people buying films or music online fell by 12 percentage points between 2006 and 2008 while those buying software and upgrades fell seven percentage points in the same period.

And the research found that although the total number of adults buying online has steadily increased year on year, the pattern of spending has remained static, indicating people generally were not spending more money online.

The same percentage of people were spending £500 or more online during a three-month period, fewer were spending between £200 and £500, and only one percentage point more were spending up to £200.

The statistics did show that the percentage of adults surveyed who said that they had ever purchased goods from the internet rose from 44 per cent in 2006 to 55 per cent this year ­ but it is unclear where these extra consumers are spending their money.

Internet retail body IMRG takes issue with the statistics. Chief executive James Roper said they are entirely inconsistent with his experience. “I have yet to meet or speak with a single person involved with internet retail who is experiencing less online spend than they were two years ago,” he said.

The IMRG Capgemini e-Retail Index suggests that UK online retail sales increased by 14.8 per cent in September, compared with the same period last year. The previous month saw a similar rise on the previous year.

Sales from November and December 2007 also show more than 50 per cent increases on amounts spent in the same period in 2006. Increases in broadband penetration and growing consumer confidence online have led to increased use across all sectors, according to IMRG.

The ONS survey used a sample size of 1,800, adjusted to reflect geographical and social distribution. When doing similar surveys, IMRG uses a sample size of not less than 4,000.

The ONS stood by its figures; a spokesman said they had followed the usual procedures.

Figures released last month by the Internet Advertising Bureau showed that display advertising increased 16.3 per cent last year, classified ad spend rose by more than 30 per cent, and paid-for ads rose by 29 per cent, with a total spend of more than £1.6bn during the period.

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