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Sharp growth in online shopping is levelling off

The sharp growth in online shopping is levelling off, according to research based on the transactions of 39m customers across 205 home shopping brands over the last five years.

The report, the Transactis Home Shopping Index, compiled by Shop Direct sister company Transactis, is released as today is forecast to be the biggest online shopping day of the year.

Termed ‘Mega Monday’ today there is expected to be more than 3,000 online orders expected every minute. Lunchtime and 7pm are forecast to be the peak moments for online buys as the virtual Christmas shopping season gets going.

However, the figures from Transactis show that growth in the channel has slowed since 2006 with sales slowing to 8% in 2010, down from 20% in 2009, 35% in 2008 and 58% in 2007.

Although top-line figures for the first two quarters of 2011 do show that, in the first half of the year, online purchasing growth rebounded slightly to 14% – but this is still well below the rate of previous peak growth years recorded by the study.

Online spend soared by 173% over the five years, 2006 to 2010, covered by the index, which encompasses purchases of fashion items, household goods, children’s merchandise, gadgets, home furnishings and other products through catalogues and websites.

The biggest growth in internet shopping over the five-year period came from consumers aged 18 to 24, who spent 1076% more online in 2010 than in 2006, followed by 25 to 34-year-olds, whose web spending escalated by 314%.

The index’s age demographic breakdown also indicates that there is less scope for future growth in online purchasing as the vast majority of those fuelling the boom in internet shopping – the youngest consumers – are already web purchasers. The figures reveal that 83% of home shoppers under age 35 were internet shoppers in 2010, making 80% of their purchases via the web.

The report also revealed that customers who use a multi-channel approach to their shopping are far more valuable than those who use a sole purchasing point, including those who use online-only.

“The customer journey has become a more subtle and complex process, led by the web,” said Michael Green director of insight at Transactis.  

“As the range of touch points grows, and economic unease lingers, it is perhaps more important than ever for retailers to pull together, analyse and use all customer data they have to hand in order to make sense of the behaviour of customers choosing to shop from home – and effectively target them with appropriate marketing communications and offers.”

Supplementary research by Transactis, which examined the purchasing of 250,000 multichannel consumers versus those shopping through a single channel, showed that those using a mix of media put in roughly 50% more orders and spent nearly double what online-only or offline-only buyers did.

The research comes as Arcadia fashion group reported last Friday (November 25) that its online sales were up 27% in the year to August 28.

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