Fear of credit card fraud is still the number one reason why UK consumers choose not to shop online.
According to a survey published this week by UK research company Verdict, consumers continue to be nervous about paying online with credit cards - and it is the number one reason why they have not yet made a purchase over the internet.
The report, entitled Electronic Shopping, said despite the financial difficulties of many business-to-consumer internet operators, the UK online shopping market will be worth about £1.35bn this year, compared with £581m in 1999. Although this sounds high, Verdict said in reality it is only 0.7 per cent of all UK retail sales.
The researcher said that although last year was described as the first online retail Christmas, for many e-retailers it was a false start.
In some cases, retailers missed the deadline for fulfilling orders, meaning that some consumers did not receive their goods until after Christmas day, said Verdict.
However, the researcher said a "more realistic" attitude this year means that the online retail industry has a much better understanding of customer service.
While Christmas last year produced online sales worth £98m, this year's business is forecast to grow more than three-fold to reach £330m.
The main reasons for this increase are the growth in online shopping consumers and their higher level of spend, said Verdict. During the past year, four million people bought retail products online, up from 1.8 million a year ago, and they spent 18 per cent more on average.
In the past six months, an additional 800,000 people have become new shoppers. There are also more transactional sites for them to visit. Of the top 100 retailers, only nine now do not have any kind of web presence (compared with 53 in January 1999), and 42 have transactional sites (the figure was 14 in January 1999).
Verdict predicts consumer spending online for retail goods will grow by more than nine times in the next five years to £12.5bn at current prices. While this is significant, the researcher said it will still only represent 5.1 per cent of all retail sales.
A key driver for this growth will be interactive TV shopping, which Verdict predicts will account for 45 per cent of online sales by 2005.
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