An increasing range of interactive devices such as interactive digital TV and mobile phones will drive tremendous growth in the online retail market over the next five years, according to Fletcher Research, the UK Research Centre of Forrester Research.

Fletcher’s Report “UK Online Retail: From Minority to Mainstream” predicts that 7.5% of the UK’s retail sales will move online by 2005 — a massive rise from the 0.25% of all retail sales in 1999. This translates to the total of £1.7 billion in online retail revenues in 2000, rising sharply to £20 billion by 2005. Fletcher will reveal more from this important new Report to more than 250 delegates at its Retail Online Forum at Le Meridien, Piccadilly, on May 8 and 9.

Shobhit Kakkar, analyst at Fletcher Research, comments, “Currently, half of all British Internet shoppers have bought books, and while Amazon has comfortably the largest share of the market, it faces an increasing challenge from traditional retailers such as WH Smith and new entrants including Bertelsmann’s BOL. However, leisure travel and computer products are the two largest sectors. The online leisure travel market will be worth £490 million in 2000, and computer product sales will reach £410 million. Competition is intensifying in both sectors with new players such as Expedia and facing established companies like Thomas Cook and Dell.

“Early success stories such as books and computer goods will continue to show strong sales, while others, such as groceries, emerge as new category successes. For instance, Iceland has already launched a national service, and Tesco is steadily rolling out its own, helping to raise the profile of the sector,” he adds.

Importantly, TV and wireless devices are emerging as new access points and will drive online retail spending. Already, interactive TV players such as Open have reported that impressive sales and interactive services for mobile devices are being rolled out. These devices will be valuable tools at multiple stages of the sales and service process.

Also, retailers will increasingly concentrate on fulfillment, dynamic pricing, and channel integration. Retailers will shift emphasis from transparency and ease-of-use of their online offerings, and consumers will expect integrated, customised services.

Kakkar continues, “Personalisation and the use of consumer data distinguish the best online retail offerings. Most sites track consumers using cookie technology (nearly 80% of sites surveyed), but only 26% personalise the user experience. Sophisticated navigation helps users find the right products. The majority of sites include product search facilities, but most are rudimentary. “The better examples include many of the books retailers surveyed, which let users search by a range of criteria such as author, title or ISBN; other companies such as Comet offer searches either by type of product or brand.

“But weak, unclear buying processes remain a barrier to online shopping adoption. Best-practice offerings show users how far through the buying process they are, but only 17% of sites offer this feature. Navigational help is also very variable — the pictorial, position-specific help offered by British Airways is one of the strongest examples,” he concludes.