Government e-commerce figures 'massaged'

The first government study into British e-commerce may be misleading because it includes share trading, say analysts
Written by Wendy McAuliffe, Contributor

A report by the Office of National Statistics has found that £56.6bn worth of goods and services was sold over the Internet in Britain last year, but the real figure is closer to £11bn -- less than one percent of the total -- say analysts.

The ONS report aims to assess the progress of Blair's goal to "make the UK the best place in the world for e-commerce." But research company Forrester points out that the accuracy of the ONS figures is distorted by the inclusion of financial trading figures.

"Only £2bn was business-to-consumer, non-financial sales -- share trading gets a big financial chunk," said David Metcalf, analyst at Forrester. Metcalf said that Forrester predictions for 2001 showed that the online sales of goods and services in the UK would still only amount to £12.8bn. However, this figure is expected to rise to £300bn by 2005, accounting for 18 percent of all business-to-business trade, he added.

"The UK is doing pretty well -- it's a question of what is feasible, and the timeline for growth in online trade. We're not expecting significant growth until 2003," said Metcalf.

According to government targets contained with the UK Online initiative, all businesses should be trading online by 2005. The ONS report claims that 63 percent of UK businesses had access to the Internet last year, but just 600 British businesses conducted more than 50 percent of their activity over the Internet. The number of purchases made by UK businesses over the Internet totalled £19.6bn, with London-based businesses spending a quarter of this figure. Regions such as the North East, Wales and Northern Ireland spent less than £1bn online. The North-South divide was even more pronounced when Internet sales were examined, with businesses in London and the South East accounting for £24bn of the £56.6bn sales figure calculated by the ONS.

A significant factor that could be preventing smaller businesses from embracing the Internet for trading purposes is their speed of connectivity. The ONS survey found that just eight percent of UK businesses used a broadband connection to the Internet.

"The government needs to team up with its broadband stakeholder group, and put government money into marketing the benefits of online trade to small and medium-sized businesses," said Metcalf. "It should be pushing forward its Broadband Britain campaign, instead of promoting the likes of BT and NTL, and other saturated broadband groups," he added.

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