Is Scotland missing out ??

Throughout 2008 the IMRG-Capgemini index tracked online sales, reporting phenomenal month on month increases.  Even as the economy hurtled into recession through the autumn, the rate of growth continued.  Whilst online shopping at Christmas was not immune from the economic downturn,   Amazon, play.com  and other online companies reported bumper sales, and in general trade was larger, later and longer than in 2007 according to the latest research by IMRG, eDigital Research and Secure Trading. 

"The underlying message that runs through these results is continuing consumer confidence in the online channel.... We expect to see this continue with the online retail channel at the forefront of aggressive sales activity during 2009." comments Chris Russell, Director at eDigitalResearch.

This week the British Retail Consortium figures for the year to December 2008 showed that non food, non store sales rose by 30%, year on year.  So while the high street struggled, online sales grew, and this doesn't include all the business to business (B2B) online sales.  ONS calculates that online sales in the UK are now worth £160bn per annum - almost twice the GDP of Scotland.

Unique Position
The UK is currently in a unique position as the online capital of Europe, with a higher spend per capita than in the US, more online sales than anywhere else in Europe, and increasingly savvy consumers.  Improved security, excellent fulfilment, better broadband access and all manner of comparison sites are making us all more comfortable purchasing online. Businesses now regularly source supplies online, from stationery to overalls, coffee to travel tickets.

Over the last ten years companies like Asos, Bravissimo and Boden have become household names across the UK, with the overwhelming majority of their sales coming from the web. In Scotland the travel and tourism sectors have been early adopters with companies like Barrhead Travel,  Globespan and Canvas Holidays increasingly reliant on their  web business.  New specialist suppliers such as Toolstop and Rooms you Love, are breaking into the market and building business at a tremendous rate.  So its not that Scotland isn't tapping in to this new channel,  but ...

The Opportunity
And the ‘but’ is we only have a very small share of overall UK figures.  Minimally  5% - but probably nearer to 10% - of all UK online sales should be secured by Scottish businesses, but look at the top 50 eshops and there's not one Scottish company amongst them.  Sure, the top 50 does include companies like Tesco and Amazon UK - but the rest is made up of household UK names, not multinationals.  Scotland is missing out !

So in this hugely difficult trading environment here is something we can do collectively to help Scottish companies to build new business. We should look to grab a bigger share of this lucrative online market. A whole host of small businesses across Scotland from food and drink to tourist businesses could take advantage of this.

Scotland benefits from highly professional web development and digital marketing companies with the skills to help companies get properly online and a growing fulfilment sector with the expertise to make sure that goods arrive on time in good condition.  New packaging materials enable the freshest and most perishable of goods, such as fish and meat, to be delivered safely. 

Left unchecked, Scottish businesses will not only continue to miss out on opportunities to sell their goods more widely, but will come under increasing pressure from on-line competitors who are able to fulfil local needs without having a geographic presence in Scotland.

The Benefits
Beyond the fact that this is a significantly important and growing channel to market, online stores or eshops have a very fast return on investment if done properly. They are relatively inexpensive to establish, don't require major investment in property, and enable you to access not just your local market but the whole of the UK and beyond (although truly international sales may need country specific customisation).

ebusiness of this type will transform your business and you will need to invest in upskilling staff over time, as you grow your sales.  Fast reliable fulfilment is a pre-requisite so you need good reliable fulfilment/delivery partners.  You also need an experienced web development supplier, with good digital marketing skills, and you’ll need to create a responsive mind set amongst your team so that your website is always up to date, you are tracking competitors etc .  But this becomes second nature,  as you get more experienced at trading in this way.

By the time Scotland comes out of the recession, online trading will be even more common.  Let's take this time to help Scottish business protect market share by getting seriously online and positioned to be ahead of the wave when the economy improves.

 

Comments

[Peter Mowforth, Chief Executive, INDEZ International Ltd.]

Great post Polly.

We strongly agree with your points. Although there is little logic to it, we do regularly hear from English business contacts that they view Scotland as a bit remote for eCommerce due to logistics and transport costs. Although this is not true and not backed up by the statistics from successful Scottish eTraders, it does suggest that we need some angle that provides Scottish online retailers with a positive advantage. For some time I have been trying to push the concept of a free port offering a tax advantage offered to those who base their eCommerce business in Scotland. In the same way that the Jersey is responsible for a significant portion of the sales and fulfilment side of UK CD and DVD sales, Scotland could provide a tax framework that allows Scotland to have a positive advantage for online businesses. The idea might have legs given that it would allow the Scottish Government to find one more way to differentiate itself from UK policy. If Jersey can do it then why not Scotland? Our goal here is to help make Scotland the eCommerce tiger of Europe.