E-tail gives retail a helping hand
Online buoys both offline and rural business, according to latest Online Business Index
Thousands of small high street businesses have ensured a brighter outlook for 2010 by establishing a presence online.
The findings of eBay’s third Online Business Index demolish claims that online retail is responsible for the decline of the traditional high street business. In fact, the majority (79%) of bricks and mortar firms believe the introduction of online trade has saved their business. Furthermore four fifths (80%) of online-only SMEs believe that bricks and mortar businesses are rendered more sustainable by having an online offering as well.
The Index challenges perceptions of the online economy by showing a significant proportion (44%) of online retailers are based in rural areas. These businesses are providing a much needed boost to rural economies and generating income in a way that would have been impossible without the internet.
The online businesses surveyed in the report also call for improvements to the same infrastructure as bricks and mortar businesses including: enhanced postal and delivery services (42%), simplified rules on consumer protection (36%) and lower taxes for all businesses (53%). Investment in faster broadband (18%) or universal broadband access (13%) is considered much less of a priority, despite the considerable amount of attention given to them in the government’s Digital Britain report.
Mark Lewis, Managing Director for eBay in the UK, said: “There is no doubt that the internet has transformed the way we shop and has challenged retailers, both online and offline, to raise their game to meet ever higher consumer expectations. However, the assumption that the rise of the internet must mean the fall of the high street is shown to be a fallacy in our latest Online Business Index.
“Yet while internet businesses provide a significant lifeline to both the high street and the countryside, there is a strong feeling that the government does not sufficiently understand the needs of online retailers.”
Shaun Redhead manages a family-run shop selling musical instruments. The shop was founded in 1998 and he began selling online in 2007. Since then, Redhead has never looked back: “We began selling online because we wanted to sell our products to a wider market. In the short time we have been trading online, the income of the business has doubled. As a result, we’ve been able to invest more into our business and grow at an exciting pace. Most importantly, it has allowed us to expand our bricks and mortar shop; in fact we have now bought the store next door and doubled the shop in size.”
Businessman Andrew Rowson took over his high street family business selling towbars, cycle carriers and roof bars in 2003. After a year of struggling to grow his business, he decided to open an online shop in addition to his bricks and mortar presence. He now has a turnover online of £1.2 million per year.
Rowson said: “We can have the best of both worlds – in fact, it’s very important that we do. Our business has been in the family for decades but was struggling to remain competitive. By introducing an online presence, we not only bolstered business but brought our offering to a global audience. Plus, it meant that we could retain the physical shop that is so essential to who we are.”
Conservative Shadow Business Minister Mark Prisk MP agrees with Rowson’s analysis of the relationship between online and bricks-and-mortar businesses: “We shouldn’t always assume that online and bricks-and-mortar businesses are different. Indeed, many conventional businesses are adding an online component to enhance their bricks-and-mortar offering. Our high streets benefit from the web because it allows many small shops to extend their reach to a global market.”
Methodology for Online Business Index • The Online Business Index is eBay’s quarterly survey of companies trading on the internet. The index focuses on the attitudes and business performance of hundreds of online businesses operating on eBay. • It is based on a major survey of 508 online retailers. • The survey was conducted by independent research consultancy FreshMinds, using seller information provided by eBay. Survey fieldwork was carried out online between Friday 28 August 2009 and Tuesday 15 September 2009. • On average, the businesses covered obtained 42% of their income from eBay, and 26% from other websites, including 10% from Amazon. 21% of their income came from their bricks and mortar businesses. • All survey respondents are registered as businesses on the eBay site and have an annual turnover of at least £68,000 on eBay alone, excluding other sources of income. The largest group of respondents (44%) were small businesses with a turnover between £100,000 and £199,000. • All figures in this report have been rounded to the nearest percentage point. As a result, figures may not always add up to 100%.