According to a UK SEO (search engine optimisation) company, most non-internet users are dismissive of online commerce via a computer or TV, according to a survey of 4,000 UK households.

Their attitude is in stark contrast to internet users - who are increasingly taking to the concept of e-commerce and are using the internet as a reference tool and, most evidently, as a means of communication.

When asked whether they would be happy paying for any goods and services through their TV, 69% of the respondents gave a definitive "no" whilst only 16% gave a definite "yes".

This is likely to be as much the result of a genuine preference for traditional purchasing methods as ignorance about the workings and advantages offered by online purchasing.

Until the means of conducting online shopping have entered the mass market - through TV, computer or phone - we will not be able to get an accurate picture of the true potential offered by e-commerce.

Yet despite the apparent rejection by the mass market, the online industry is thriving, with time spent online growing and positive online buying indications suggesting a potential boom market for e-commerce.

 

Online Shopping

For the 11% of households who currently use the internet, one of the most significant changes in traditional media and home activity anticipated over the next two years is in shopping habits.

The move to online shopping began with shopping for specific items, in most cases commodity shopping. Consumer entertainment goods (music, videos, CDs), computer and other electrical hardware tend to be homogenous items, with geographic convenience and price being the two most important elements in determining which shop such items are bought from.

These products are the most suitable for online sale and the growth in the number of companies offering them has been considerable over the last 12 months - with a large number of high-street retailers leading what could be construed as a defensive charge into e-commerce ventures.

In many of these instances, the online stores are far from compelling, with difficult interfaces and an unwillingness to undercut their retail store pricing. However, with a large number of retailers also beginning to integrate internet technologies into their supply chains, the potential for price cutting is enhanced.

Unlike the USA, where a thriving e-commerce market exists for a large range of commodity and non-commodity items (e.g. groceries, holidays, financial services), the UK market is under-developed and lacks the level of competition needed to drive efficiencies into supply processes.

This, of course, will change with more and higher-quality online shops and easier navigation around different stores (using shopping "bots" that can compare prices at a range of online stores).

However, it appears to be the case that UK demand for e-commerce is not being met by supply. As indicated by the significant discrepancies between actual ordering and willingness to order, the areas of most opportunity appear to be those for holiday and travel services, music and video goods and event tickets.

Given the value of a typical travel transaction, it could be argued that, of those, the travel market has the potential to reach the largest size. However, all product types have considerable room for growth and that demand needs to be serviced.

30% of current internet users have already bought online compared to 64% who would be willing to purchase online. Thus the immediately addressable market is over twice the size of the current market - and it could be argued that a boom e-commerce market should in fact be with us today. So, what is happening?

The state of the market is indicated by the 70% who have never purchased anything online: by far the most common reason was their perception that the internet is not secure enough (31%) whilst a further 7% mistrust internet vendors.

Given the widespread acceptance of SSL encryption by vendors and its support in the major browsers, it seems that education should be the most important objective for vendors.

One way of achieving this, as Excite is doing in the USA, is for a trusted internet brand to apply e-commerce approval tags (and even limited buying guarantees) to reassure users that the vendors are secure and trustworthy.

This is also a central reason for AOL's continued success is e-commerce. The AOL service gives the perception of being a more closed and secure service than the public internet and one in which the vendors are seen to have been approved (and hence are trustworthy).

AOL's US subscribers spent an average $95/87 ecu-plus in the month running up to Christmas and, in a recent survey, 85% of AOL users said that they would be more willing to buy from a vendor featured on the AOL service than elsewhere.

However, security is not the only key reason for users' reluctance to buy online. Lack of knowledge about what is on offer (16%), inconvenience (15%) and an inability to find the required goods (9%) again suggest that the supply side is failing to meet demand.

Interestingly, traditional retail's usual defence that most consumers prefer to shop in person is not borne out by the figures. Only 2% stated a preference for going to the shops or the "personal touch" as the reason they had not shopped online.

 

Conclusion

Currently, the PC remains the primary form of access to the internet and, while this continues, the majority of people will remain excluded from the internet phenomenon. This is clearly the prime inhibitor of e-commerce growth.

However, 70% of current internet users have not purchased online and the survey indicates that a significant proportion of them would be happy to if they could find the right products at the right price and could be assured that their payment details will be used only for the intended purchase.

The supply side of the UK e-commerce market has yet to mature to a level where competition has any significant influence on vendor offerings as it should. After all, economists see the internet as having the potential to be the "perfect market".

High-street vendors are only just beginning to open online stores but the emphasis has been on integrating product databases into a web front end and merely having an e-commerce enabled web site.

Few have been able to reconcile offline and online price models and, with most online only vendors more interested in reinvesting to establish their brand as quickly as possible (as opposed to cutting their margins / prices), the reasons for shopping online are, in many cases, far from compelling.

Until the market matures to the stage where strong and trusted brands are as commonplace online as offline and competition has forced the supply side to listen to the demand side, we will have this significant gap between those who have purchased and those who are willing to purchase online.