Business development · 31 July 2015

Etailers set to surpass physical stores’ online sales for first time

Etailers look to generate £21.8bn in sales for 2015 compared to £21.5bn from bricks and mortar stores
Etailers look to generate £21.8bn in sales for 2015 compared to £21.5bn from bricks and mortar stores

The rise of etailers in the UK has meant they are set to surpass traditional physical stores for the first time, as sales made by newer internet companies will overtake online sales of store-based retailers in 2015.

According to market research company Mintel, etailers – those without physical stores – are predicted to generate £21.8bn in sales for 2015, while the online sales of bricks and mortar stores are set to increase by 11 per cent to £21.5bn.

This may yet change as high street stores continue to make a push in the online space and become increasingly competitive on price and the streamlining of their internet offerings.

Richard Perks, director of retail research at Mintel, said: “Online is putting customers back in control. They are better informed and much less incline dto give a retailer the benefit of the doubt.”

He added that while names like Currys and Comet were initially “like rabbits in the headlights – they didn’t know what to do” when it came to moving online, store-based retailers were “becoming more confident now” in their approach.

The crossing over of physical and online has seen Google venture into stores and the likes of Etsy and eBay experimenting with pop ups to have a physical presence too.

Amazon, the largest retailer which is yet to develop a bricks and mortar side, has long been rumoured to be toying with the prospect of establishing a high street shop.

In the past, CEO Jeff Bezos said he “would love to open physical stores, but only if we could have a truly differentiated idea” , and last year it was speculated Amazon would open its first in Manhattan’s Midtown, though it was predominantly used for corporate offices.

The element of relationship building between customer and retailer is a bonus to the physical presence that is often pointed to as one of the advantages etailers don’t have access to.

Perks said it’s still tricky for solely online stores to “provide the levels of service that store-based retailers are able to offer”.

Though with the frequent developments in aspects such as consistent next-day delivery and exploring same-day delivery, online fans may argue that customers feel their wishes are being responded to even more effectively online in some respects.

Discussing the push some online stores are making into the physical space, Perks pointed out “this is likely to increase their costs and further erode the price difference between instore and online”.

Mintel’s report also indicated that online shoppers would be spending more on electrical goods than fashion for the first time, with sales of electronics to increase 18 per cent to £12.6m and sale of clothing and footwear to grow 14 per cent to £12.4bn.

The top three was completed by food shopping, which accounts for a fifth of all internet sales. Almost half of electronic goods are bought online, as opposed to 19 per cent of fashion purchases.

Image: Shutterstock

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ABOUT THE EXPERT

Rebecca is a reporter for Business Advice. Prior to this, she worked with a range of tech, advertising, media and digital clients at Propeller PR and did freelance work for The Telegraph.

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