UK e-retail sales keep rising in May on falling average basket value

UK online retail growth continued at the same pace in May as in April, with sales rising 16%year-on-year and by 5% on the previous month but the average shopping basket value declined, the

IMRG highlighted the impressive year-on-year growth in view of the strong sales over the GoldenJubilee during the same period last year. Despite the strong overall growth, however, the averageshopping basket value, excluding travel, fell to £77 from January to May 2013, down from £83 and£86 for the same period in 2012 and 2011 respectively.

This development could be due to shoppers looking for bargains online who are therefore morelikely to purchase items at a cheaper price boosting sales while reducing average basket value, theassociation explained. At the same time, conversion rates soared to 4.9% (excluding travel) in May,up 20% compared to the same month in 2012 and 2011.

Tina Spooner, Chief Information Officer at IMRG, said: “Due to the ease with which customers canbrowse between retail sites in search of the right offer for them, pricing has become morecompetitive than ever. While the online retail market continues to grow at a faster-than-expectedrate, customers are spending less per transaction which impacts on the profit margins for thebusiness. In fact, the average online basket value year-to-date is down over 10% compared with thesame period in 2011. This declining trend is not likely to shoot up again quickly, as theexpectation of value goes hand-in-hand with shopping online.”

Among the well-performing categories, the clothing sector saw a strong 16% year-on-year growthin May as higher temperatures encouraged consumers to update their summer wardrobes. The warmerweather also led to more purchases for the house with the Home and Garden sector recording a 41%increase in like-for-like sales last month, compared to the same period last year.

Comparing online-only and multichannel retailers, online-only retailers continue to outperformtheir multichannel counterparts with sales rising by 18% year-on-year in May, while retailers whichhave both a physical and online presence recorded a 16% rise. IMRG attributed this development toincreased confidence among consumers in the internet as a transaction medium and the increasedadaption of technologies and services (tablets, PayPal) introduced by online retailers.

Growth in sales via mobile devices – smartphones and tablets – was strong with a year-on-yearincrease of 148% in May, although this was the lowest annual growth since the launch of theM-Commerce Index, compared to last year levels of over 200%.

Chris Webster, Head of Retail Consulting and Technology at Capgemini, observed: “The onlinesales reflect the ongoing economic climate. Whilst there has been a slight growth in averageearnings, it is still running behind the current rate of inflation of 2.4%; as a result Brits haveto be savvier shoppers and embrace the savings that can be found online. The challenge to the highstreet is that once shoppers get used to the convenience of online and the ability to make theirmoney go further, this behaviour will continue even as health is restored to the economy.”

Meanwhile, a separate eCustomerServiceIndex by IMRG and eDigitalResearch revealed an all-timehigh consumer satisfaction with online shopping between July 2012 and January 2013 rising to 83.4%from its lowest score of 76.7% in July 2009. The eCustomerServiceIndex survey has been trackingconsumer satisfaction of online customer journeys across a range of retailing sectors (includingfashion, food and drink and travel) since November 2008.

Derek Eccleston, Commerical Director at eDigitalResearch, commented: “Since we started runningthe eCustomerServiceIndex in 2008, we’ve witnessed a big change in customer behaviour. With theexplosion of smartphones and m-Commerce around four years ago, followed by the introduction oftablet devices a couple of years later, consumers are now online more than ever. As retailers andbrands continue to invest both time and effort into a number of online platforms, it’s no surprisethat overall satisfaction with online experiences is on the rise.”

“However, despite the steady rise in overall satisfaction over the years, it is clear from theresults that there is still more that can be done to ensure that all online customer experiencesare a great one,” IMRG stressed. Almost a quarter (23%) of respondents said that they wanted abetter delivery experience, while another 17% would like to receive a quicker response to theirqueries as 40% of respondents would appreciate some sort of improvements to their customer servicecontact such as a live chat facility or free phone contact number.